GIFT   OF 
Prof.    Hatfield 


ADMINISTRATIVE 
AND  INDUSTRIAL 
ORGANIZATION 


INSTRUCTION    PAPER 


PRBPARKD  RT 


JAMES  B.  GRIFFITH 
•  I 

HEAD,   DEPT.  OK  COMMERCE,.  ACCOUNTANCY,  ANIJ  BUSINESS 
ADMINISTRATION,    AMERICAN   SCHOOL  OF   CORRKSI'ONDENCE 


AMERICAN   SCHOOL  OP   CORRESPONDENCE 

CHICAGO  II^WNOIS 

U.S.  A. 


Copyright  1909  bv 
American  Schooi,  of  Correspondkncb 


Entered  at  Stationers'  Hall,  London 
All  Rights  Reserved 


^  /M-^C^ 


ADMINISTRATIVE   AND    INDUS- 
TRIAL ORGANIZATION 

1.  With  little  fear  of  contradiction,  it  may  be  stated  that  every 
commercial  enterprise  is  conducted  with  the  one  purpose  in  view  of 
making  money  for  its  owners.  Naturally,  the  owners  desire  the 
largest  possible  returns  from  their  investment  of  money  or  time,  or 
both.  Every  person  connected  with  the  enterprise,  in  any  capacity 
whatsoever,  is  indirectly  working  for  the  same  purpose — to  make 
as  much  money  as  possible  for  the  owners  of  the  business. 

The  largest  possible  volume  of  profitable  business  must  be 
transacted;  the  business  must  be  conducted  with  economy;  the 
returns  from  each  dollar  expended  must  be  as  large  as  possible.  This 
very  condition  is  one  of  the  beneficial  results  of  modern  business 
methods.  The  demand  for  a  greater  volume,  lower  cost  of  production, 
and  more  economical  methods,  has  brought  with  it  an  incentive  to 
greater  effort  on  the  part  of  the  individual,  with  corresponding  rewards. 

That  the  efforts  of  the  individual  may  be  productive  of  best 
results,  he  must  have  the  cooperation  of  other  individuals  engaged 
in  the  same  enterprise.    The  enterprise  must  be  properly  organized. 

Realizing  the  absolute  necessity  of  harmoniously  working  organi- 
zations, keen  students  of  business  affairs  have  given  much  study  to 
the  question  of  how  to  organize  a  business.  They  have  studied  the 
plans  of  operation  of  the  most  successful  enterprises,  for  the  purpose 
of  discovering  those  factors  which  have  contributed  most  largely 
to  their  success.  They  have  investigated  and  improved  old  plans 
and  methods  and  invented  new  methods. 

2.  The  Business  Engineer.  The  investigations  of  these  men 
have  brought  into  being  a  new  profession — that  of  the  business 
organizer  or  business  engineer — a  profession  that  has  quickly  gained 
recognition.  Business  men,  especially  those  at  the  head  of  large 
enterprises  have  not  been  slow  to  avail  themselves  of  the  services  of 
men  who  have  mastered  the  science  of  business  organization. 

For  the  same  reason  that  he  has  long  employed  an  architect  to 
plan  his  building  the  modern  business  man  calls  in  a  business  engi- 

Copyright,  1909,  by  American  School  of  Correspondence. 


M114910 


'2  ' , '   ;  f  , ,:  /7;  ORGANIZATION 

neer  or  systematizer,  to  perfect  his  business  organization.  As  in 
every  other  profession,  some  incompetent  men  are  found  posing  as 
business  engineers,  but  an  increasing  number  of  trained  men  are 
entering  the  field.  It  is  the  v/ork  of  these  men  that  is  placing  the  pro- 
fession on  a  high  plane. 

The  successful  business  engineer  must  have  the  ability  to  quickly 
grasp  the  plan  of  operation  of  any  business  with  which  his  work  may 
bring  him  in  contact;  he  must  be  able  to  analyze  conditions  and  to 
determine  the  factors  which  make  for  the  success  or  failure  of  a  busi- 
ness. His  work  is  to  organize  and  systematize  every  step  of  the 
work  in  every  department. 

3.  The  Preliminary  Investigation.  The  first  step  in  the  organi- 
zation or  systematizing  of  a  business  is  to  determine  its  natural 
divisions.  What  is  the  nature  of  the  business,  and  what  are  its  dis- 
tinguishing characteristics?  Be  it  a  manufacturing,  jobbing,  whole- 
sale, retail,  or  professional  concern,  there  is  some  one  head  on  whom 
rests  the  final  responsibility  for  the  success  or  failure  of  the  business. 
He  must  be  surrounded  with  subordinates,  each  having  certain  duties 
to  perform,  who  will  be  responsible  for  the  performance  of  those 
duties,  thereby  cooperating  to  carry  out  the  purposes  of  the  enter- 
prise. 

The  highest  type  of  organization  is  found  among  the  great  indus- 
trial enterprises.  These  enterprises  with  their  many  activities  most 
readily  lend  themselves  to  the  application  of  scientific  principles  of 
organization.  Here,  organization  can  be  carried  to  its  final  con- 
clusion; in  a  smaller  enterprise  the  same  principles  apply,  but  modifi- 
cation of  details  is  necessary. 

If  we  study  the  organization  of  a  large  enterprise,  regarding  it 
as  a  type,  we  can  more  readily  grasp  the  requirements  of  a  smaller 
business.  But  it  must  be  remembered  that  in  any-event,  the  individual 
business  must  be  studied  and  the  organization  made  to  fit  the  business. 
A  tailor  does  not  cut  all  coats  from  the  same  pattern. 

In  certain  respects  a  great  industrial  organization  may  be  likened 
to  the  army.  At  the  head  of  the  army  is  the  commanding  general, 
on  whom  rests  the  responsibility  for  the  success  of  any  campaign. 
He  is  surrounded  by  his  staff,  with  whom  he  consults  on  questions  of 
importance.  When  any  important  move  is  decided  upon,  the  mem- 
bers of  the  staff — themselves  in  command  of  divisions  of  the  army — 


ORGANIZATION  3 

issue  orders  to  their  subordinate  officers.  They,  in  turn,  pass  the 
orders  along,  and  at  a  predetermined  moment,  an  entire  army  is  set  in 
motion. 

Another  important  feature  of  the  army  organization  which  should 
be  applied  to  the  organization  of  a  business  is  the  disregard  of  the 
individual.  Military  authorities  long  since  discovered  that  a  high 
standard  of  efficiency  could  be  maintained  only  through  the  organiza- 
tion of  the  army  along  certain  lines.  The  question  was  not  one  of 
creating  offices  the  duties  of  which  would  conform  to  the  capabilities 
of  certain  men ;  the  offices  were  first  created,  and  then  competent  men 
were  selected  to  fill  them. 

4.  Individuals  Disregarded.  In  creating  responsibilities  in  a 
business  organization,  the  individual  should  be  disregarded,  just  as 
he  is  in  the  army.  Unfortunately,  the  importance  of  this  questio'i 
is  not  always  recognized.  Too  frequently  the  best. interests  of  the 
organization  as  a  whole  are  subserved  to  the  interests  of  individuals. 
Business  enterprises  are  organized  and  offices  divided  among  the 
principal  owners  without  seriously  considering  their  respective  abili- 
ties. This  is  wrong  in  principle,  and  works  to  the  detriment  of  the 
business.  It  is  one  of  the  important  problems  to  be  solved  in  organi- 
zation. Jones,  who  is  a  natural  born  financier,  prefers  to  manage 
the  selling  end  of  the  business,  while  Brown,  a  salesman  of  ability,  is 
made  treasurer.  Neither  is  in  the  right  place;  change  them  about, 
and  an  efficient  team  would  result. 

Before  we  can  perfect  an  organization,  we  must  know  what  the 
business  is.  We  must  ascertain  for  what  it  is  organized;  what  class 
of  business  is  carried  on;  manufacturing,  mining,  jobbing,  wholesale, 
retail,  or  a  combination  of  two  or  ipore  classes;  whether  conducted 
entirely  in  one  plant  or  through  branches;  the  method  of  marketing 
the  goods;  by  traveling  salesmen,  agencies,  or  mail;  the  facilities 
for  obtaining  supplies,  raw  materials,  or  manufactured  goods,  ^^^len 
we  understand  the  nature  of  the  business,  we  are  in  a  position  to  work 
out  an  impersonal,  systematic  organization. 

Referring  again  to  the  necessity  of  a  disregard  of  individuals  in 
perfecting  an  organization,  it  is  not  the  province  of  the  business  engi- 
neer to  determine  the  qualifications  of  the  men.  He  must  be  governed 
solely  by  the  requirements  of  the  business,  ^^^^en  his  work  is  com- 
pleted it  is  for  the  management  to  decide  who  is  l>est  fitted  to  assimie 


4  ORGANIZATION 

the  duties  and  carry  out  the  purposes  of  the  departments  and  positions 
created. 

We  refer,  for  convenience,  to  the  business  engineer  or  systeina- 
tizer;  the  principle  is  the  same  whether  the  one  doing  the  work  is 
acting  in  a  professional  capacity,  perfecting  the  organization  of  his 
employer's  business,  or  even  solving  the  problems  of  his  own  establish- 
ment. 

OBJECTS  AND  CHARACTERISTICS  OF  ORGANIZATION 

5.  To  reduce  the  subject  to  concrete  form,  the  objects  of  business 
organization  may  be  defined  as  follows: 

(A)  To  unite  the  individuals  who  are  to  conduct  an  enterprise  into  a 
body  which  will  work  systematically  to  a  common  end. 

(B)  To  bring  together  or  group  the  component  parts  of  the  body  with 
respect  to  their  specific  relations  and  duties. 

(C)  To  elect  officers  and  appoint  committees  and   authorities   with 
clearly  defined  duties  and  responsibilities. 

These  definitions  all  lead  to  a  common  center,  that  is,  co-opera- 
tion. Without  co-operation  the  success  of  any  organization  is  very 
questionable,  if  not  impossible.  W^ith  it — a  body  of  men  all  working 
together  for  a  common  end — almost  any  apparent  obstacle  will  be 
surmounted.  No  matter  how  large  an  organization  may  be,  how 
many  or  wide  its  ramifications,  if  the  spirit  of  co-operation  prevails, 
it  will  move  as  one  irresistible  body. 

And,  regardless  of  the  size  or  nature  of  a  business  enterprise,  the 
organization,  as  here  used,  resolves  itself  into  certain  easily  distin- 
guished components,  as  follows: 

First:  The  owners,  represented  in  a  corporation  by  the  stockholders  or 
investing  public;  in  a  partnership,  by  the  partners;  in  an  individual  business, 
by  the  proprietor. 

Second:  The  executive  or  managerial  division. 

Third:  The  commercial  or  active  business  division. 

Fourth:  The  manufacturing  or  productive  division. 

These  components  lend  themselves  naturally  to  certain  specific 
subdivisions;  natural  groups  are  formed  to  insure  efficient  man- 
agement; certain  authorities  are  delegated  to  effect  economical 
operation. 

The  stockholders  (owners)  first  elect  from  among  their  number, 
a  board  of  directors.  This  is  the  initial  step  toward  perfecting  a 
business   organization.     The   directors    represent    the   stockholders, 


ORGANIZATION  5 

and  the  interest  of  the  stockholder,  as  such,  becomes  that  of  an  in- 
vestor only.  His  interest  in  the  operation  of  the  business  is  to  be 
looked  after  by  the  directors,  whom  he,  or  a  majority,  has  elected. 

From  this  board  of  directors  is  built  the  framework  of  the  execu- 
tive or  managerial  division.  The  first  act  of  the  directors  is  to  meet 
and  elect  the  usual  executive  officers:  President,  Vice-President, 
Secretary,  and  Treasurer.  In  modern  organizations,  it  is  customary 
to  also  elect  or  appoint  an  executive  committee  or  hoard  of  managers. 

This  committee  consists  of  three  or  more  members,  usually 
selected  from  the  officers,  to  which  may  be  added  one  or  more  direc- 
tors who  are  not  officers. 

To  this  committee,  the  board  of  directors  delegates  its  authority 
in  the  actual  conduct  of  the  business.  This  plan  of  electing  an  exec- 
utive committee  is  particularly  desirable  when  the  board  is  a  large 
one,  as  it  concentrates  authority  and  results  in  more  prompt  action 
on  matters  demanding  immediate  attention.  A  large  body  is  un- 
wieldy, a  cjuorum  cannot  always  be  brought  together  on  short  notice, 
but  a  working  majority  of  a  small  committee  can  be  convened 
promptly. 

The  executive  committee  takes  charge  of  both  the  commercial 
and  manufacturing  divisions.  To  still  further  concentrate  authority, 
it  is  customary  to  appoint  a  General  Manager  who  has  direct  super- 
vision over  the  immediate  operation  of  both  commercial  and  manu- 
facturing divisions.  He  is,  appointed  sometimes  by  the  executive 
committee,  but  more  often  by  the  board  of  directors. 

The  general  manager,  while  occupying  a  position  of  chief  acting 
executive,  acts  with  the  executive  committee  and  is  directly  responsible 
to  the  board  of  directors. 

The  commercial  division  of  a  business  naturally  sub-divides  into 
two  sections:  Accounting,  and  Advertising  and  Salej.  The  first 
thought  of  the  student  "might  be  that  accounting  is  given  a  position  of 
too  great  importance,  but  in  the  sense  here  used  it  means  the  records 
of  the  business  of  every  nature,  the  accounts,  the  gathering  and  record-, 
ing  of  statistics  and  information  of  every  character. 
\y  The  manufacturing  division  divides  into  7^?<n7/«.v/////  and  Stores, 

and  Prodnction.  In  a  measure,  the  purchasing  of  goods  is  a  function  of 
Mie  commercial  division,  but  the  purchasing  of  raw  material  and  sup- 
plies is  properly  under  the  supervision  of  the  manufacturing  division, 


L^ 


ORGANIZATION 


CHARTING  THE  ORGANIZATION 


6.  What  may  be  termed  the  anatomy  of  an  industrial  body, 
is  most  graphically  shown  by  means  of  charts.  Free  use  of  charts 
will  be  made  throughout  these  papers.  With  properly  designed 
charts  the  logical  divisions  of  authority  or  expense  can  be  clearly 
shown. 

Fig.  1  furnishes  a  graphic  illustration  of  the  principal  components 
of  the  organization  under  discussion.  In  the  first  group  we  find  the 
owners  (stockholders)  whose  line  of  communication  with  the  business 
is  through  the  board  of  directors.  Subordinate  to  the  board  of  direc- 
tors are  its  own  executive  officers,  the  executive  committee,  and 
general  manager. 

The  connecting  lines  show  the  executive  committee  to  be  in 
direct  communication  with  the  board  of  directors,  while  the  general 
manager  is  in  direct  communication  with  both  the  executive  com- 
mittee and  the  board  of  directors. 

Under  the  general  manager  are  the  commercial  and  manufac- 
turing divisions,  over  both  of  which  he  has  direct  supervision. 

7. ;  Working  Authorities  in  Large  Enterprises.  The  next  logical 
step  in  the  development  of  our  organization  is  a  study  of  the  working 
authorities  and  responsibilities  of  the  different  officers  and  their 
assistants.  We  have  seen  that  the  administrative  authority  is  for 
practical  purposes  centered  in  the  general  manager.  It  is  not  to  be 
supposed,  however,  that  in  a  large  industrial  organization  he  will 
personally  supervise  all  of  the  details  of  operation  of  the  commercial 
and  manufacturing  divisions.  His  time  must  not  be  taken  up  with 
details  which  can  be  as  well  handled  by  subordinates.  He  should  be 
free  to  devote  his  time  to  questions  of  policy,  the  providing  of  finances, 
the  consideration  of  new  fields  of  endeavor,  and  the  making  of  the 
more  important  contracts.  His  immediate  assistants  will  be  a 
Comptroller  and  a  Superintendent 

The  comptroller  fills  a  position  identical  with  that  of  a  business 
manager  or  an  assistant  manager.  His  duties  are  mainly  in  connec- 
tion with  the  commercial  division.  It  is  his  business  to  devise  sys- 
tems of  accounts  and  systems  for  recording  the  activities  of  every 
department,  and  have  reports  compiled,  in  proper  form  for  presenta- 
tion to  the  general  manager.  His  is  a  statistical  department,  filling 
a  place  between  the  general  manager  and  the  subordinate  depart- 


^^^^^^« 


Fig.  1.    Chart  of  a  Corporate  Manufacturing  Enterprise 


8  ORGANIZATION 

merits,  and,  while  not  closing  the  avenues  of  communication  between 
these  departments  and  the  general  manager,  it  is  here  that  reports  and 
records  of  results  are  concentrated. 

The  superintendent  is  in  immediate  charge  of  manufacturing 
operations  and  is  responsible  for  the  custody  of  all  property  used  in 
manufacturing.  His  position  does  not  close  the  avenue  of  communi- 
cation between  factory  departments  and  the  general  manager. 

Fig.  2  illustrates  the  subdivisions  of  the  commercial  and  manu- 
facturing branches.  This  chart  does  not  go  back  of  the  administra- 
tive section  of  the  organization,  as  the  stockholders  have  no  direct 
connection  with  the  actual  operation  of  the  business. 

We  find  the  subdivisions  of  the  commercial  branch  in  charge  of 
the  following:  Chief  Accountant,  with  direct  supervision  over  all 
bookkeeping  and  accounting  records;  Chief  Stenographer,  in  charge 
of  all  stenographic  and  circularizing  work;  Advertising  and  Sale.-i 
Managers,  in  charge  of  publicity  and  selling  campaigns;  Credit  man, 
in  charge  of  credits  and  collections. 

The  manufacturing  department  includes  the  Purchasing  Agent, 
who  purchases  all  manufacturing  stores,  materials,  and  supplies; 
Chief  Stores  clerk,  in  charge  of  the  storage  of  all  materials  and  sup- 
plies; Chief  Engineer,  who  designs  new  products,  new  machinery 
for  the  manufacture  of  that  product,  and  conducts  all  experimental 
work;  Chief  Draftsman,  who  superintends  the  work  of  the  drafting 
rooms;  Assistant  Superintendent,  in  charge  of  maintenance  of  power 
and  heating  plants,  internal  transportation  facilities,  machinery 
and  buildings;  Foremen,  in  charge  of  shops  employed  in  production 
work. 

As  shown  by  the  lines  of  communication,  represented  by  the 
heavy  lines,  the  authorities  of  the  comptroller  and  superintendent 
extend  to  every  phase  of  the  work  of  the  commercial  and  manufac- 
turing branches.  The  comptroller  is  in  communication  with  the 
manufacturing  branch  since  the  making  of  schedules,  time  keeping, 
and  the  assembling  of  cost  statistics  are  all  centered  in  his  office. 
He  does  not,  however,  assume  any  of  the  duties  of  the  superintendent, 
and  while  their  work  is  closely  related,  the  two  officers  conduct  their 
departments  without  conflict  of  authorities.  It  must  be  remembered 
that  they  are  equally  responsible  to  the  general  manager,  which  of 
itself  requires  cordial  cooperation. 


COMMERCIAL 


CHIEF  ACCOUNTANT 


CHIEF 
STENOGRAPHER 


ADVERTISING  MGR. 


SALES   MGR. 


CREDIT    MAN 


MANUFACTURING 


PURCHASING    AGENT 


CHIEF 
STORES    CLERK 


CHIEF     ENGINEER 


CHIEF    DRAFTSMAN 


FOREMEN 


ASSISTANT 
SUPER  INTENDENT 


Fig.  2.    A  Chart  of  Working  Authorities  in  a  Manufacturing  Business 


10  ORGANIZATION 

8.  Organization  Applied  to  Small  Business.  We  have  referred 
only  to  large  manufacturing  enterprises  divided  into  many  depart- 
ments, necessitating  a  division  of  executive  duties  among  a  larg3 
number  of  minor  executives.  While,  in  the  organization  of  a  smaller 
enterprise,  not  all  of  these  department  heads  will  he  required,  the 
principles  of  organization,  so  far  as  division  of  authority  is  concerned, 
remain  the  same. 

In  the  small  corporation,  we  find  the  same  board  of  directors 
elected  by  the  stockholders.  This  board  may  be  small,  consisting 
of  no  more  than  five,  or  even  three  members,  but  the  same  executix  e 
officers  are  elected.  One  man  may  hold  more  than  one  office,  as  secre- 
tary and  treasurer,  or  vice-president  and  treasurer,  yet  each  office  is 
filled.  If  the  board  is  small  the  executive  committee  may  be  omitted, 
in  which  case  the  board  itself  performs  the  duties  of  the  executive 
committee.  There  is  the  same  general  manager;  at  least  the  duties 
exist  even  though  there  be  no  such  office  in  name.  The  president 
may  act  as  the  executive  head,  and  be  recognized  as  the  actual  mana- 
ger of  the  business,  but  in  so  doing  he  is  acting  in  an  entirely  different 
capacity  than  that  pertaining  to  the  office  of  president. 

Extending  the  illustration  to  a  small  manufacturing  enterprise, 
the  general  manager  may  assume  all  of  the  duties  of  the  comptroller 
in  the  operation  of  the  commercial  branch;  he  may  be  his  own  sales 
manager  or  credit  man ;  or  in  the  manufacturing  branch,  he  may  act  as 
superintendent. 

The  treasurer  of  the  corporation  may  be  the  accountant  and 
also  act  as  credit  man.  The  advertising  and  sales  managers  may 
be  one,  or  the  superintendent  may  be  the  purchasing  agent  as  well. 

The  point  intended  to  be  emphasized  is  that  there  are  certain 
duties  to  be  performed,  certain  responsibilities  to  be  met,  certain 
authorities  to  be  assumed  even  though  it  be  but  a  one-man  business. 
And  in  this  is  illustrated  the  importance  of  creating  any  business 
organization  without  regard  to  individuals. 

^9.)  Organization  of  Mercantile  Business.  Leaving  for  a  time 
the  organization  of  a  manufacturing  enterprise,  we  will  consider  th:> 
application  of  the  principles  of  organization  to  a  trading  business. 
In  such  a  business,  the  administrative  section  remains  the  same: 
stockholders,  directors,  officers,  executive  committee,  general  manager 
At  this  point  the  business  naturally  divides  into  the  departments  of 
buying  and  .ielliiih. 


Fig.  3.    A  Chart  of  a  Corporate  Trading  Enterprise 


12  ORGANIZATION 

The  buying  department  is  subdivided  into  purchasing,  stock, 
and  shipping.  The  subdivisions  of  the  sales  department  are  sales 
and  accounting.  Our  cliart  of  the  organization  shown  in  Fig.  3, 
folloM^s  the  same  Unes  as  Fig.  1,  the  only  change  being  in  the  main 
divisions. 

Advancing  the  next  step  we  find  the  executive  officers  in  charge 
of  the  several  divisions  of  the  work,  corresponding  very  closely  to 
those  shown  in  Fig.  2.  The  buying  department  is  in  charge  of  the 
Purchasing  Agent,  Chiej  Stock  Clerk,  and  Shipping  Clerk,  or  Traffic 
Manager,  as  he  is  sometimes  known. 

The  selling  department  is  in  charge  of  the  Chiej  Accountant, 
Advertising  Manager.  Sales  Manager,  and  Credit  Man.  This  is 
shown  clearly  in  the  chart,  Fig.  4. 

Lest  an  erroneous  impression  be  gained,  it  may  be  well  to  state 
at  this  point  that  the  advertising  and  sales  managers  must  work  in 
perfect  harmony.  Indeed,  advertising  is  one  branch  of  the  sales 
department  and  the  success  of  one  is  so  closely  interwoven  with  the 
other  that  no  important  step  should  be  taken  by  either  independently. 
\^n  many  large  concernsythe  sales  manager  is  the  real  advertising 
manager,  even  though  another  may  supervise  the  actual  routine  of 
preparing  advertising  matter.  A  competent  advertising  man  makes 
a  successful  sales  manager  and  every  sales  manager  should  have 
advertising  training,  for  the  purpose  of  advertising  is  to  create  a 
demand  and  assist  in  making  sales. 

Referring  again  to  Fig.  4,  it  is  seen  that  both  buying  and  selling 
departments  are  under  the  control  of  the  general  manager,  from  whom 
direct  lines  of  communication  lead  to  every  division  of  these  depart- 
ments. Direct  communication  is  also  maintained  between  the  two 
departments.  The  accounting  division  keeps  the  accounts  of  the 
buying  department;  the  sales  division  must  be  in  communication 
with  the  purchasing  and  stock  division  in  respect  to  maintaining  the 
stock  to  be  sold,  and  with  the  shipping  division  in  respect  to  the  filling 
of  orders. 

10.  Universal  Application  of  Organization  Principles.  When 
we  go  into  all  of  the  ramifications  of  business  we  find  many  establish- 
ments where  minor  variations  of  our  plan  of  organization  appear 
necessary,  but  in  the  final  analysis,  the  fundamentals  prove  to  be  the 
same. 


SELLING 


CHIEF  ACCOUNTTANT 


DIRECTORS 


EXECUTIVE  A 

COMMITTEE  j 


ADVERTISING   MGR. 


SALES     MGR. 


CREDIT    MAN 


BUVING 


PURCHASING    AGENT 


CHIEF 
STOCK     CLERK 


SHIPPING    CLERK 


Fig.  4.    Chart  of  Working  Authorities  In  a  Trading  Business 


14  ORGANIZATION 

Reduced  to  its  simplest  form,  we  will  suppose  the  business  under 
consideration  to  be  a  small  retail  establishment  conducted  by  two 
partners.  No  thought  has  been  given  to  the  principles  of  organiza- 
tion, yet  they  are  applied  in  that  little  store  just  as  surely  as  in  the  im- 
mense manufacturing  plant. 

Ask  any  commercial  salesman  calling  on  the  firm  who  is  the  man 
to  see  regarding  the  introduction  of  a  new  line  of  goods,  and  he  will 
probably  answer,  "Mr.  Jones  is  the  man  to  see;  he  does  the  buying." 
With  no  thought  of  organization,  the  owners  of  this  little  business 
realize  that  it  is  best  for  one  man  to  do  the  buying.  Perhaps  the  other 
may  inspect  samples,  his  opinion  may  be  asked,  he  may  even  place  an 
occasional  order,  but  it  is  not  the  rule  of  the  establishment.  By 
placing  the  buying  in  the  hands  of  one  partner,  confusion  is  avoided. 
He  can  keep  in  closer  touch  with  prices,  and  the  results  are  far  more 
satisfactory. 

Advancing  to  the  larger  retail  business  of  the  department  store, 
whether  the  general  store  of  the  small  town  or  the  big  store  of  the 
city,  we  find  a  different  problem.  Here  the  buying  is  further  special- 
ized, for  one  man  buys  for  one,  or  at  most  three  or  four  departments. 
The  same  men  act  as  sales  managers  and  buyers  in  the  departments 
for  which  they  are  responsible.  The  manager  of  a  department  in  a 
big  store  is  selected  as  much  for  his  ability  as  a  buyer  as  for  his  sales- 
manship. But  we  do  not  get  away  from  fundamental  principles, 
for  in  buying  and  selling  the  manager  is  performing  two  entirely 
separate  and  distinct  functions. 

No  matter  what  the  business,  we  find  the  same  two  fundamental 
functions,  that  is,  buying  and  selling.  As  illustrations  of  the  appli- 
cation of  this  principle  to  different  businesses  we  give  the  following: 

Publishers  of  newspapers  and  other  periodicals  buy  editorial  work, 
manuscript,  engraving,  paper,  printing;  sell  subscriptions,  advertising  space. 

Publishers  of  books  buy  editorial  work,  manuscript,  engraving,  paper, 
printing;  sell  books. 

Railroad  companies  buy  equipment,  rails,  lumber,  coal,  supplies,  labor; 
sell  freight  and  passenger  transportation. 

Schools  and  colleges  buy  textbooks,  supplies,  services  of  instructors; 
sell  instruction. 

Professional  men  buy  their  instruction,  books,  instruments,  office  furnish- 
ings, clerical  assistance;  sell  their  services. 

In  every  undertaking,  revenues  are  produced  through  salesman- 
ship.    Every  business  and  every  profession  has  something  to  sell, 


ORGANIZATION  15 

and  its  financial  success  depends  largely  upon  the  quality  of  sales- 
manshijJ^  employed,  ^^^lethe^  it  be  a  professional  man  with  nothing 
but  his  senices  to  sell  and  no  other  means  of  advertising  than  through 
work  well  done,  or  a  gigantic  commercial  organization  with  its  exten- 
sive advertising  campaign  and  many  salesmen,  a  selling  organization 
exists  in  some  form.  And  before  anything  can  be  sold  it  must  be 
procured,  or  bought. 

On  this  question  of  the  universal  application  of  the  principles 
of  organization,  we  quote  from  a  valuable  contribution  in  The  Engi- 
neering Magazine,  by  C.  E.  Knoeppel: 

"  While  business  as  it  is  now  conducted  is  not  as  simple  as  it  was  in  the 
barter  days,  it  must  not  be  inferred  that  this  segregation  of  authority  is  syn- 
onymous with  complexity,  for  its  very  purpose  has  been  to  simplify,  and  that 
is  what  it  has  accomplished.  It  is  only  where  this  segregation  has  been  the 
result  of  lack  of  thought  and  proper  attention,  or  other  like  causes,  that  we 
find  a  complex  and  unsatisfactory  condition  of  affairs.  In  fact,  there  is  all 
about  us  sufficient  evidence  that  many  commercial  enterprises  are  being  con- 
ducted along  lines  that,  as  far  as  evolutional  development  is  concerned,  are 
several  stages  behind  the  times 

"Let  us  suppose  a  case,  which  will  apply  in  a  greater  or  less  degree  to 
the  majority.  In  the  earlier  development,  we  will  say  that  the  founder  of 
the  business  was  able,  on  account  of  its  small  size,  to  make  what  sketches  he 
needed,  solicit  orders,  see  that  they  were  filled,  perhaps  take  a  hand  at  the 
making  if  occasion  required,  see  to  the  shipments,  and  attend  to  the  collections 
and  the  keeping  of  his  few  accounts.  He  finds  that  the  business  grows,  and 
eventually  places  a  man  in  charge  of  certain  branches  while  he  looks  after 
others.  The  accounts  eventually  require  more  attention  than  he  can  give 
them  so  he  engages  a  bookkeeper  in  order  that  he  may  be  relieved  of  the  work. 
He  finds  that  the  quantity  of  materials  received  and  shipped  amount  to  enough 
to  warrant  a  receiving  clerk  as  well  as  a  shipping  clerk,  and,  to  handle  this 
material  from  its  inception  to  shipment  he  conceives  the  idea  of  placing  a  man 
in  charge  as  stock  clerk.  He  then  adds  a  purchasing  agent,  in  order  that  he 
may  be  relieved  of  the  detail  and  that  purchases  may  be  made  most  economi- 
cally; a  man  is  placed  in  charge  of  the  orders;  foremen  are  placed  in  charge 
of  certain  men  in  the  shops;  the  details  connected  with  making  plans,  draw- 
ings, estimates,  etc.,  are  taken  over  by  a  practical  man;  his  manager  is  given 
a  man  to  look  after  the  shops  or  engineering  branch;  while  the  commercial 
branch  with  its  many  details  is  placed  in  the  hands  of  another.  As  the  evolu- 
tion continues,  the  selling  branch  is  assumed  by  one  man;  cost  details  are 
looked  after  by  another;  a  chief  inspector  is  added  in  order  that  all  work 
may  be  shipped  according  to  specifications;  the  engineer,  who  before  had 
been  a  sort  of  jack  of  all  trades,  is  placed  in  charge  of  certain  work,  while  an 
electrician  is  engaged  to  look  after  this  particular  work;  and  so  this  segrega- 
tion continues  as  the  development  continues. 

"  Perhaps  it  is  not  to  be  wondered  at  that  the  founder,  in  looking  back- 
ward, is  inclined  to  pat  himself  on  the  back  when,  in  a  reminiscent  mood,  he 


16  ORGANIZATION 

considers  what  he  terms  'remarkable  development.'  He  considers  that  he  has 
been  wonderfully  successful  in  building  up  a  business  which  at  the  beginning 
was  so  small  as  to  admit  of  his  supervising  every  detail,  while  today  he  em- 
ploys a  dozen  men  to  do  the  work  he  once  did.  There  is  no  getting  away  from 
the  fact  that  it  is  this  same  feeling  of  self-satisfaction  that  is  responsible  for  a 
large  number  of  faulty  organizations,  for  if  we  should  tell  this  manufacturer 
that  his  business  is  far  from  being  as  successful  as  it  is  possible  for  it  to  be  .  .  . 
he  would  vigorously  resent  any  such  accusation;  but  the  fact  remains  that  it  is 
not  the  success  it  .should  be,  for  the  very  reason  that  the  development  has  been 
allowed  practically  to  take  care  of  itself.  New  men  were  added,  new  offices 
created,  only  when  absolutely  necessary,  each  newcomer  being  given  a  general 
idea  of  what  .was  expected  of  him,  and  not  knowing,  not  thinking,  or  perhaps 
not  having  the  time  to  give  more  than  passing  attention  to  the  matter,  the 
proprietor  did  not  consider  the  fact  that  his  business  was  a  unit,  with  each 
worker  a  part,  having  a  distinct  relation  with  every  other  worker.  Hence,  as 
the  efficiency  of  any  organization  is  directly  in  proportion  to  the  care  with 
which  these  relations  are  considered  and  treated,  his  organization  naturally 
fails  to  attain  that  degree  of  efficiency  obtainable,  and  for  this  condition  he, 
and  he  only  is  responsible." 

11.  Departmental  Authorities.  The  next  logical  step  in  the 
development  of  our  organization  is  an  analysis  of  the  departmental 
organizations.  We  have  seen  how  the  operations  of  the  business  are 
divided  among  several  divisions  or  departments.  The  reason 
for  such  divisions  is  apparent.  In  a  large  business  no  one 
man  can  personally  super\'Lse  all  of  its  activities.  Each  division 
is  engaged  in  certain  activities  that  demand  the  immediate 
supervision  of  specialists.  One  man  is  a  specialist  in  advertising, 
another  in  sales  plans,  others  in  purchasing,  specific  manufacturing 
operations,  or  the  design  and  maintenance  of  appliances  intended 
to  improve  the  product  or  to  reduce  costs. 

To  reach  the  highest  state  of  efficiency  in  every  department  of 
the  business,  these  specialists  must  be  employed,  which  is  another 
reason  for  organizing  a  bfisiness  along  the  line  of  its  activities,  and 
without  respect  to  individuals. 

Before  we  can  decide  what  manner  of  man  should  be  placed  at 
the  head  of  this  or  that  department,  we  must  study  the  duties  of  the 
position,  the  responsibilities  involved,  the  authorities  to  be  assumed. 
To  present  this  problem  in  graphic  form,  the  chart  (Fig.  5)  is  de- 
signed. Wliile  the  arrangement  is  not  inconsistent  with  Fig.  2,  this 
chart  of  the  same  class  of  organization  is  laid  out  along  the  lines  of 
authority.  It  shows  both  the  authority  of  the  department  head  and 
the  necessary  activities  of  his  division. 


OllGANiZATIOK 


17 


VVe  have  selected  the  organization  of  a  large  industrial  establish- 
ment for  the  very  reason  that  many  divisions  and  departments  are 
necessary.  The  smaller  organization  will  have  a  less  number  of 
divisions,  but  it  is  much  easier  to  condense  than  to  expand  a  given 
plan.  Any  man  who  understands  the  requirements. of  a  large  organ- 
ization can  readily  adapt  those  ideas  to  a  smaller  establishment.     He 


Fig.  5.    A  Chart  "Which  Shows  the  Duties,  Responsibilities  and  Authorities  to  be 
Assumed  by  Each  Departnaeut  Head 


can  apply  the  plan  so  far  as  it  can  be  used  to  advantage.  Some 
variations  of  the  application  of  the  plan  will  be  pointed  out  in  our 
departmental  analysis. 

It  is  perhaps  unnecessary  to  say  that  while  the  authorities  of 
some  of  the  department  heads  have  been  referred  to  in  preceding 


18  ORGANIZATION 

pages,  this  analysis  is  intended  to  exhibit  these  authorities  in  greater 
detail. 

12.  General  Manager.  As  a  rule  the  general  manager  has 
general  supervision  over  the  commercial  and  manufacturing  branches. 
In  conjunction  with  the  president  and  executive  committee,  he  formu- 
lates all  policies  to  be  followed  in  purchasing,  manufacturing,  sales, 
and  advertising,  establishing  credits,  and  accounting  methods.  He 
is  responsible  to  the  executive  committee  and  board  of  directors  for 
procuring  materials,  their  manufacture  and  sale,  and  the  maintenance 
of  buildings  and  machinery. 

It  is  his  duty  to  keep  in  touch  with  the  operations  of  every  de- 
partment and  to  post  himself  on  the  general  efficiency  of  all  classes 
of  workmen.  Through  reports  he  will  keep  informed  in  regard  to 
the  results  of  the  operations  of  every  department. 

While  in  direct  communication  with  all  department  and  division 
heads,  he  will  have  for  his  immediate  assistants,  a  comptroller  and  a 
superintendent.  It  is  from  the  comptroller  that  he  will  receive 
statistics  and  reports  of  the  activities  of  the  business  in  all  its  branches, 
while  to  the  superintendent  he  delegates  his  authority  in  the  actual 
operation  of  the  manufacturing  branch. 

13.  Comptroller.  "A  controller  or  manager"  is  a  standard 
definition  of  the  term  comptroller.  In  the  organization  under  con- 
sideration, he  is  a  controller  of  the  business  by  virtue  of  the  fact  that 
he  is  responsible  for  the  accounting  and  recording  of  all  activities  of 
the  business. 

He  occupies  the  position  of  auditor  and  is  the  real  systematizer 
of  the  business. "  He  creates  all  systems  of  commercial  accounting,  cost 
accounting,  departmental  records,  time  keeping,  and  pay  rolls,  reports 
of  superintendent,  perpetual  inventory,  sales  statistics,  and,  in  fact,  all 
records  of  the  business.  He  prepares  all  balance  sheets,  comparative 
statements,  trading,  manufacturing,  and  profit  and  loss  statements,  and 
reports  to  the  general  manager  or  executive  committee,  or  both,  on 
the  condition  of  finances,  materials,  and  finished  goods. 

Since  the  formation  of  important  policies  may  hinge  on  the 
reports  and  statistics  of  his  department,  he  occupies  an  office  next 
in  importance  to  the  general  manager.  The  training  and  experience 
gained  in  his  office  place  him  in  direct  line  for  promotion  to  the  office  of 
general  manager. 


ORGAXIZATIOX  i9 

His  authority  is  absolute  over  the  accounting  and  stenographic 
departments,  while  his  authority  extends  to  other  departments  only 
in  respect  to  their  record  systems.  In  the  accounting  department, 
his  direct  assistant  is  the  chief  accountant;  and  in  the  stenographic, 
the  chief  stenographer. 

In  a  smaller  organization  the  comptroller  may  not  require  the 
services  of  a  chief  accountant,  in  which  case  he  performs  the  duties 
of  the  position.  Or  the  treasurer  may  occupy  the  oflBce  of  comp- 
troller. 

Chiej  Accountant.  The  chief  accountant  is  in  immediate  charge 
of  the  commercial  and  factory  accounting.  His  assistants  are  cashier, 
bookkeepers,  factory  accountant,  cost  clerks,  time  clerks. 

This  department  accounts  for  the  receipt  and  disbursement  of  all 
moneys  and  properties,  figures  costs  and  pay  rolls,  and  prepares 
statistics  necessary  for  the  use  of  the  comptroller  in  making  up  his 
reports  and  statements. 

It  is  evident  from  this  that  the  comptroller  is  in  a  sense  the  custo- 
dian of  all  property  belonging  to  the  business,  since  he  must,  through 
his  accounting  department,  account  for  its  receipt  and  disbursement. 
This  explains  why  the  comptroller  prescribes  all  systems  for  the  care 
and  recording  of  stores,  supplies,  and  finished  product. 

Chiej  Stenographer.  The  chief  stenographer  is  at  the  head  of  the 
correspondence  department,  with  authority  over  all  stenographers, 
typists,  filing  and  mailing  clerks. 

Stenographers  are  supplied  to  all  divisions  by  this  department. 
This  plan  of  having  all  stenographers  in  one  department  subject  to 
the  call  of  those  having  need  of  their  ser\'ices  is  now  adopted  by  most 
large  concerns,  except  in  a  few  cases  where  stenographers  act  as  private 
secretaries  to  the  officers.  The  plan  is  an  economical  one,  for  only 
the  number  actually  required  to  handle  the  work  of  the  establishment 
need  be  employed.  Under  the  old  plan  of  employing  one  or  more 
stenographers  in  each  department,  it  is  common  to  find  them  idle  in 
one  department  while  in  another  the  work  is  behind.  Another 
strong  point  in  favor  of  the  more  modern  plan  is  that  each  stenog- 
rapher becomes  familiar  with  the  dictation  of  all  departments,  and 
no  stenographer  has  an  opportunity  to  become  familiar  with  the 
secrets  of  the  business. 

In  the  stenographic  department,  the  work  of  addressing  and 
mailing  form  letters,  catalogues,  and  circulars  is  done. 


20  ORGANIZATION 

AH  correspondence  is  filed  by  this  department. 

Records  of  office  supplies,  stationery  and  printed  matter  are 
maintained  in  this  department. 

The  chief  stenographer  has  charge  of  and  accounts  for  all  postage, 
but  secures  postage  by  requisition  from  the  cashier  or  accountant. 

14.  Sales  Division.  By  far  the  most  important  division  of  the 
entire  commercial  branch  is  the  sales  division.  This  division  is 
responsible  for  finding  a  market  for  the  output  of  the  business. 

It  must  create  a  demand  for  the  product  through  advertising, 
open  new  fields,  study  the  demands  of  the  trade  and  the  products  of 
competitors,  ascertain  as  far  as  may  be  the  possibilities  of  marketing 
new  products,  and,  above  all,  sell  goods  at  a  profit. 

The  selling  division  of  some  of  the  largest  industrial  establish- 
ments is  in  sole  charge  of  a  general  sales  manager,  who  has  authority 
over  the  advertising  as  well  as  selling.  In  our  chart  we  have  divided 
responsibility  for  the  conduct  of  this  division  between  sales  and  ad- 
vertising managers,  placing  the  advertising  manager  on  an  ef(uality 
with,  rather  than  subordinate  to,  the  sales  manager.  This  combina- 
tion will  produce  the  most  satisfactory  results  for  most  enterprises. 
I  Advertising  Manager.     The  advertising  manager  has  charge  of 

the  preparation  of  all  advertising  literature,  catalogues,  copy  and 
designs  for  all  periodical  advertising  and  usually  the  placing  of  all 
contracts  for  printing  and  engraving. 

He  has  authority  over  all  artists  and  copy  writers  employed 
regularly  and  for  special  work. 

With  the  sales  manager  and  general  manager,  he  makes  up 
appropriations  for  periodical  advertising  and  places  contracts  when 
these  appropriations  have  been  approved. 

He  confers  with  the  sales  manager  on  all  questions  pertaining 
to  his  work,  no  printed  matter  for  the  use  of  the  selling  division  being 
ordered  until  approved  by  the  sales  manager.  Thus,  cooperation 
of  the  sort  that  makes  for  success  is  assured. 
^  Sales  Manager.  The  sales  manager  has  authority  over  the  sale 
of  goods  and  filling  of  orders,  and  his  department  is  divided  into 
selling  and  filling.  The  selling  department  is  further  subdivided 
into  salesmen  and  mail  orders. 

One  .subdivision  represents  that  portion  of  the  sales  made  by 
personal  salesmen.  The  active  work  is  carried  on  by  salesmen  who 
call  on  the  trade  under  the  orders  of  the  sales  manager. 


ORGANIZATION  21 

The  sales  manager  hires  all  salesmen,  prescribes  their  territories 
and  routes,  and  supervises  their  expense  accounts. 

He  compiles  reports  and  statistics  of  their  work  for  presentation 
to  the  comptroller  or  general  manager,  and  keeps  the  records  pre- 
scribed for  this  department. 

The  mail  order  division  is  engaged  in  the  sale  of  goods  by  the 
use  of  letters,  circulars,  and  catalogues.  Lists  of  customers  and 
prospective  customers  are  maintained,  and  sales  follow-up  systems 
are  operated  under  the  immediate  superv  ision  of  this  division. 

In  the  filling  department,  the  chief  order  clerk  is  in  charge  of 
entering  sales  orders,  making  shipping  orders  and  manufacturing 
orders.     He  maintains  a  record  of  sales  and  manufacturing  orders, 
so  that  he  can  keep  informed  on  manufacturing  or  stock  requirements. 
All  invoicing  of  shipments. is  done  in  this  department. 

The  shipping  clerk  maintains  records  of  rates  of  transportation 
by  rail,  water,  or  truck,  and  keeps  posted  on  routes  and  facilities. 
He  supervises  the  packing  of  all  goods,  and  secures  proper  receipts 
from  transportation  lines. 
V  Credit  Man.  The  position  of  the  credit  man  is  an  important  one 
in  any  establishment. 

He  collects  and  records  information  about  the  financial  responsi- 
bility and  credit  standing  of  customers.  When  necessary,  he  makes 
special  investigations,  and  on  the  basis  of  his  information  extends  or 
limits  credit.  Every  order  from  a  new  customer  must  be  approved 
by  the  credit  man  before  it  can  be  accepted. 

WTien  accounts  have  been  opened,  it  is  the  duty  of  the  credit  man 
to  collect  them  when  due,  or,  if  not  paid  promptly,  to  use  every  means 
to  secure  a  settlement.  His  work  brings  him  in  contact  with  both 
the  sales  and  accounting  departments. 

The  credit  man  is  assisted  by  such  clerks  and  collectors  as  may 
be  necessary  for  the  conduct  of  his  department. 

15.  Superintendent.  The  superintendent  is  given  general  super- 
vision over  the  manufacturing  branch  of  the  business.  His  author- 
ity extends  directly  to  the  engineering  and  drafting  departments,  the 
work  of  the  assistant  superintendent,  foreman  of  tool  room,  and  shop 
foremen.  His  relations  with  the  purchasing  department  are  advisory 
rather  than  managerial. 

His  immediate  assistants  are  the  chief  engineer,  assistant  superin- 
tendent, and  shop  foremen. 


22  ORGANIZATION 

It  is  his  duty  to  execute  orders  for  the  manufacture  of  goods, 
operate  the  plant  in  the  most  economical  manner,  study  and  intro- 
duce processes  and  methods  that  tend  to  reduce  manufacturing  costs, 
and  keep  informed  generally  on  the  efficiency  of  men,  machinery, 
appliances,  and  materials  in  all  manufacturing  departments. 

With  the  assistance  of  the  purchasing  agent  he  provides  all 
materials  and  supplies  required  in  the  manufacture  of  goods  or  for 
the  operation  of  the  plant. 

Chiej  Engineer.  The  chief  engineer  designs  all  special  ma- 
chinery and  appliances  to  be  manufactured  for  use  in  the  plant, 
designs  and  plans  all  new  products  for  which  there  appears  to  be  a 
demand,  and  personally  S'lpervises  the  experimental  department. 
The  installation  of  new  equipment  is  also  done  under  his  supervision. 

His  authority  extends  to  the  drafting  department  which  is  in 
charge  of  a  chief  draftsman.  This  department  draws  all  designs, 
plans  of  new  machinery  or  product,  and  all  plans  not  classed  as 
architectural. 

In  a  plant  where  many  special  tools  are  made,  the  chief  engineer 
also  has  authority  over  the  tool  room. 

Assistant  Superintendent.  The  assistant  superintendent  is  re- 
sponsible for  the  maintenance  in  efficient  condition  of  all  power, 
pumping,  heating,  and  lighting  plants,  internal  transportation  facili- 
ties, and  the  repair  of  buildings  and  equipment. 

Except  in  the  larger  plants,  he  has  authority  over  the  tool  room 
which  is  placed  in  charge  of  a  tool  room  foreman.  This  department 
is  responsible  for  the  custody  of  all  tools,  repairs  to  tools,  and  their 
manufacture.  Tools  are  issued  only  'on  requisition  and  perpetual 
inventories  are  maintained  according  to  systems  prescribed. 

In  some  very  large  industrial  plants,  like  a  steel  plant,  there  are 
several  assistant  superintendents,  each  having  specific  duties.  There 
may  be  a  superintendent  of  power,  superintendent  of  transportation, 
superintendent  of  machinery,  superintendent  of  buildings,  superin- 
tendent of  stores,  etc.  In  a  small  plant,  the  superintendent  will 
personally  perform  the  duties  here  assigned  to  the  assistant  superin- 
tendent. 

Shop  Foremen.  As  the  name  indicates,  the  shop  foremen  are  in 
charge  of  the  various  shops  or  manufacturing  departments.  It  is 
the  duty  of  the  shop  foreman  to  lay  out  the  work  chilled  for  by  the 


ORGANIZATION  23 

orders  of  the  superintendent,  and  to  assign  the  work  to  his  men.  He 
will  make  provision  for  the  prompt  execution  of  orders  by  making 
requisition  for  the  number  of  men  that  can  be  profitably  employed  in 
his  department.    It  is  his  duty  to  keep  all  of  his  men  supplied  with  work. 

16.  Purchasing  Agent.  The  purchasing  agent  has  charge  of 
the  purchase  of  all  materials  for  the  manufacturing  branch,  and  in 
some  cases  for  the  commercial  branch.  In  a  purely  trading  concern, 
his  duties  would  be  in  connection  with  the  commercial  or  sellinjr 
branch,  but  in  a  large  industrial  enterprise,  the  purchase  of  office 
supplies,  advertising  literature,  etc.,  is  usually  under  the  supervision 
of  the  comptroller,  chief  accountant  or  advertising  manager. 

He  procures  catalogues,  price  lists,  names  of  manufacturers 
and  dealers,  and  keeps  generally  informed  as  to  sources  of  supply. 
He  obtains  samples  which  are  submitted  to  tests  by  the  engineering 
department  or  otherwise. 

With  the  superintendent  and  general  manager,  he  makes  schedules 
of  materials,  secures  bids,  and  places  orders.  Records  of  orders  and 
all  information  needed  in  his  office  are  kept  according  to  the  systems 
prescribed  by  the  comptroller. 

He  has  full  authority  over  the  store  rooms,  in  which  he  is  assisted 
by  the  chief  stores  clerk.  This  department  receives  all  goods,  checks 
receipts  with  orders  or  invoices,  stores  the  goods,  delivers  them  on 
properly  executed  requisitions,  and  maintains  perpetual  inventory 
records  as  prescribed. 

EMPLOYMENT  DEPARTMENT 

17.  A  department,  or  rather  a  sub-department,  not  shown  on 
the  chart  but  found  in  some  establishments,  is  the  employment 
department.  This  department  is  very  properly  in  immediate  charge 
of  the  superintendent,  and,  in  the  average  manufacturing  plant,  he 
will  hire  all  men.  In  a  plant  employing  a  great  number  of  men,  it 
is  impossible  for  the  superintendent  to  personally  take  charge  of  this 
work,  and  an  employment  agent  is  placed  in  charge. 

The  employment  agent  keeps  records  of  all  employes  and  appli- 
cants and  hires  all  men  needed  by  the  different  foremen. 

GENERAL   MODIFICATIONS 

18.  The  organization  that  we  have  described  is  a  representative 
illustration  of  the  application  of  the  principles  to  a  large  enterprise, 


24  ORGANIZATION 

necessitating  a  considerable  number  of  subdivisions.  But  even  here 
ttie  charts  show  only  what  may  be  termed  the  principal  divisions;  the 
charts  might  be  extended  in  greater  detail.  The  explanation  might 
include  the  exact  duties  of  every  employe  in  each  department,  but, 
as  our  purpose  is  to  present  general  principles  in  sufficient  detail  to 
serve  as  a  guide,  explanations  of  these  minute  details  have  been 
omitted. 

There  are,  however,  modifications  to  be  found  in  certain  cases 
which  may  be  made  clear  by  further  suggestions.  We  have  referred 
to  the  comptroller,  and  while  in  many  concerns  no  such  office  is  recog- 
nized, at  least  by  that  title,  some  man  in  every  business  of  any  magni- 
tude fills  an  analogous  position. 

Most  frequently  it  is  the  auditor,  or  if  the  office  of  auditor  has 
not  been  created,  it  may  be  the  treasurer.  Again,  the  duties  or  a 
greater  part  of  them,  may  fall  on  the  office  manager  or  the  chief 
accountant.  Even  in  a  small  partnership  where  one  of  the  partners 
is  the  bookkeeper,  the  duties  exist,  and  are  performed  by  that  partner 
who  keeps  the  accounts.  It  must  be  remembered  that  the  comp- 
troller's office  is  primarily  statistical.  It  matters  not  whether  the 
statistical  operations  involve  the  keeping  of  a  simple  set  of  books 
or  require  large  commercial  and  factory  accounting  forces  with  a 
third  division  to  compile  statistics  from  their  records,  every  business 
demands  certain  statistical  work.  Neither  is  it  important  whether 
the  man  in  charge  of  this  work  be  called  comptroller,  auditor,  ac- 
countant or  office  manager,  but  we  have  used  the  title  of  comj^roUer 
as  more  exactly  descriptive  of  the  functions  of  the  office  when  carried 
to  its  legitimate  conclusion  in  a  large  business. 

While,  in  most  manufacturing  industries,  the  superintendent  and 
purchasing  agent  have  full  authority  in  the  making  of  purchases  for 
the  manufactiu'ing  branch,  it  has  been  found  advisable  in  some  cases 
to  give  the  comptroller  authority  over  the  purchasing  department, 
A  reason  for  this  is  the  importance  of  reducing  the  investment  in  raw 
material,  supplies,  etc.,  to  the  lowest  point  consistent  with  the  actual 
requirements  of  the  business.  Much  needless  capital  is  tied  up  in 
raw  material,  when  it  might  be  at  least  earning  bank  interest.  His 
chief  concern  being  to  provide  a  liberal  supply  of  raw  materials,  the 
superintendent  is  very  liable  to  overstep  the  bounds  in  the  direction 
of  too  liberal  purchases. 


ORGANIZATION  25 

A  still  different  conditipn  is  found  in  a  large  merchandising 
establishment.  Here  practically  every  department  manager  is  his 
own  buyer  and  while  he  must  be  regarded  as  the  best  judge  of  what  to 
buy,  it  becomes  necessary  to  super\'ise  his  purchases  in  respect  to 
quantities.  The  comptroller  should,  therefore,  have  authority  over 
the  amounts,  invested  by  the  several  buyers  This  is  usually  con- 
trolled by  giving  the  buyer  a  stated  appropriation  at  the  beginning 
of  each  season,  the  amount  being  determined  by  a  study  of  present 
conditions  and  records  of  past  performance.  The  making  of  an 
appropriation  does  not  operate  against  special  appropriations  to  be 
used  in  taking  advantage  of  specially  advantageous  market  conditions, 
or  to  increase  stocks  of  fast  selling  lines. 

DUTIES  CLEARLY  DEFINED 

19.  One  of  the  first  requirements  in  the  development  of  a  suc- 
cessful organization  is  that  the  duties  of  every  employe  be  clearly 
defined,  and  that  each  employe  be  fully  informed  as  to  his  duties. 
Nothing  tends  to  produce  greater  friction  than  an  overlapping  of 
duties  and  authorities. 

In  a  manufacturing  plant,  when  a  foreman  is  placed  in  charge 
of  a  shop  he  should  be  instructed  as  to  his  authority,  responsibilities, 
and  exact  duties.  When  these  authorities  have  once  been  established, 
no  other  man  of  equal  or  lower  grade  in  the  organization  should  be 
permitted  to  interfere  in  any  way,  nor  should  the  foreman  be  per- 
mitted to  overstep  his  authority. 

Those  occupying  positions  to  which  greater  authorities  are 
attached  should  also  be  careful  to  not  presume  upon  their  authority 
by  attempting  to  direct  work  properly  under  control  of  the  foreman. 
The  superintendent  or  manager  who,  in  passing  through  a  plant,  dis- 
covers a  workman  in  the  act  of  violating  an  established  rule,  or  doing 
something  dangerous  to  the  lives  of  himself  and  fellow  employes,  or 
performing  work  in  the  wrong  way,  is  justified  in  at  once  bringing 
the  matter  to  the  notice  of  that  workman;  but  he  should  report  the 
occurrence  to  the  foreman  at  the  first  opportunity. 

On  the  contrary,  if  the  manager  or  superintendent  wishes  to 
make  a  change  in  policy  involving  a  departure  from  the  established 
customs  of  the  shop,  or  if  he  requires  the  services  of  a  workman  even 
temporarily  in  another  department,  he  should  first  take  up  the  matter 
with  the  shop  foreman. 


26  ORGANIZATION 

The  same  policy  in  general  should  be  observed  throughout  the 
organization.  The  person  placed  at  the  head  of  a  department  or 
division  of  the  w^ork  should  have  full  authority  and  be  held  responsible 
for  the  work  of  all  employes  in  that  department.  Complaints  of  ineffi- 
ciency of  an  individual  employe  should  be  made  to  the  department 
head.  If  the  purchasing  agent,  for  instance,  finds  the  woik  of  a  cer- 
tain stenographer  unsatisfactory,  his  complaint  should  be  made  to 
the  chief  stenographer. 

20.  Duties  of  Individual  Workmen.  The  duties  of  the  in- 
dividual workman  in  the  shop  should  be  as  clearly  defined  as  are  those 
of  his  foreman.  It  is  the  duty  of  the  foreman  to  lay  out  the  work  and 
to  keep  the  workman  regularly  employed  on  the  work  assigned  to 
him. 

In  the  operation  of  the  manufacturing  branch,  the  most  impor- 
tant consideration  is  economy  of  production.  When  a  workman  is 
kept  at  one  task  he  becomes  a  specialist,  increases  his  production,  and 
reduces  costs. 

21.  Duties  of  Office  Employes.     Each  clerk  in  the  office  should 
i   have  his  work  clearly  defined.     If  specialization  is  profitable  in  the 

shop,  it  is  equally  so  in  the  office.  Every  man  who  has  been  responsi- 
ble for  the  management  of  an  office  will  agree  with  us  that  in  no  other 
branch  of  business  is  there  a  greater  tendency  to  allow  work  to  get 
behind. 

Lack  of  system  is  mainly  responsible  for  this  state  of  affairs. 
While  his  duties  may  be  more  or  less  clearly  defined,  the  work  of  the 
average  office  clerk  does  not  follow  any  well  defined  plan.  He  does 
the  thing  that  seems  most  important,  leaving  the  less  important  tasks 
until  he  "has  time."  Instead  of  surveying  the  field  and  laying  out  a 
logical,  systematic  plan,  the  average  office  employe  goes  about  his 
work  in  a  haphazard  sort  of  way  following  the  line  of  least  resistance. 

The  work  in  every  office  is  largely  routine,  but  the  faithful  per- 
formance of  routine  tasks  is  a  necessary  accompaniment  to  those 
larger  tasks,  which  in  themselves,  appear  of  greater  importance. 
Routine  tasks  are  drudgery — something  that  every  man  seeks  to 
escape.  In  freeing  himself  from  a  state  of  drudgery,  the  department 
head  should  be  careful  lest  he  place  his  subordinates  in  the  same 
dreaded  rut.  An  office  clerk  should  be  given  an  opportunity  to  learn 
all  of  the  routine  of  the  division  in  which  he  is  employed.     He  will 


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Fig.  6.    A  Working  Chart  for  the  Guidance  of  the  Employes  in  One  Department 


2M  ()R(tANIZATION 

become  a  more  valuable  employe;  while  adding  variety,  the  perform- 
ance of  more  than  one  task  is  training  him  for  a  more  advanced  position. 

To  properly  systematize  the  routine,  the  department  head  should 
first  study  his  department  to  find  out  what  the  routine  tasks  really 
are — what  work  must  be  done  each  day  or  each  week.  He  should 
then  list  these  tasks  and  assign  them  to  certain  clerks  to  be  performed 
at  certain  stated  times. 

This  can  be  best  presented  by  means  of  a  chart  as  shown  in  Fig.  6. 
This  chart  covers  the  work  of  a  typical  general  accounting  depart- 
ment. At  the  top,  the  general  or  routine  tasks  are  listed,  grouped 
under  proper  divisions.  From  each  task  listed  a  line  is  extended  to 
the  time  when  it  is  to  be  performed :  daily,  the  day  of  the  week,  day 
of  the  month,  or  the  month.  The  letters  at  the  end  of  the  lines  indi- 
cate by  whom  the  tasks  are  to  be  performed,  C  representing  clerics,  B, 
bookkeepers,  and  A,  cashier. 

Taking  the  collection  division  as  an  illustration,  we  will  suppose 
that  it  is  Monday,  the  2nd  of  the  month.  The  chart  shows  that  on 
Monday  notices  of  notes  and  accounts  due  are  to  be  mailed.  On  the 
second  day  of  the  month,  past  due  accounts  must  be  taken  up  and  dis- 
posed of.  In  addition  are  the  daily  tasks  as  indicated  by  the  lines 
extending  to  the  daily  line. 

WTien  a  task  is  to  be  performed  two  or  three  times  in  a  month, 
the  line  is  broken  and  the  letter  inserted  at  each  break.  Even  the 
time  of  drawing  off  a  balance  sheet,  once  every  three  months,  is 
indicated.  A  similar  chart  should  be  made  to  show  the  routine 
duties  of  each  department. 

Such  charts,  supplying,  as  they  do,  complete  working  schedules 
for  the  routine  of  each  department,  soon  reduce  the  time  taken  by 
routine  tasks,  which  is  of  no  little  importance  in  the  conduct  of  a 
well  regulated  department.  They  fill  a  place  in  office  routine  anal- 
ogous to  that  of  the  working  plan  in  the  shop.  The  same  idea  can 
bo  carried  out,  and  will  prove  equally  valuable,  even  in  an  office 
where  the  bookkeeper  does  all  of  the  work. 

CHARTING  SALARY  AND  WAQE  DISTRIBUTION 

22.  We  have  seen  how  authorities,  responsibilities  and  even 
routine  duties  are  most  graphically  represented  by  means  of  charts — 
the  working  plans  of  the  recording  divisions  of  the  business.     For 


ORGANIZATION  29 

purposes  of  record,  the  distribution  of  the  expenditures  for  salaries 
and  wa^s  of  those  who  make  up  our  organization  is  of  equal  im- 
portance to  the  definition  of  the  authorities  and  duties. 

If  the  accounts  are  to  be  of  value  the}'  must  be  correct,  and  they 
cannot  be  correct  unless  every  item  is  charged  to  the  proper  account. 
The  value  of  correct  accounts  is  recognized.  They  do  more  than 
show  what  we  have  received  or  the  expenditures  for  a  specific  purpose 
during  a  stated  period;  they  show  when  and  why  an  expense  is  in- 
creased or  decreased.  With  such  information  to  point  the  way  to 
economies  in  the  future,  instead  of  records  that  show  us  merely  the 
amount  of  an  expense  already  incurred,  accounting  takes  its  rightful 
place  as  one  of  the  most  important  functions  of  a  business  enterprise. 

Probably  more  businesses  have  failed  owing  to  the  lack  of  proper 
accounting  methods  than  from  any  one  other  cause.  Many  a  busi- 
ness has  been  rejuvenated — turned  from  failure  to  success — by  the 
introduction  of  a  system  of  accounts  that  truthfully  portrays  its  activi- 
ties. Few  business  failures  are  the  result  of  a  failure  to  buy  goods  a  t 
right  prices,  or  to  establish  selling  prices  that  show  a  profit.  The 
more  usual  cause  is  found  in  leaks  in  the  expense  account.  Any 
method  that  locates  the  leaks  places  us  in  position  to  stop  them. 

The  chief  value  of  accounting  records  hes  in  the  opportunity 
afforded  for  comparison.  The  fact  that  a  certain  expense  amounted 
to  $900.00  last  month  furnishes  no  information  of  special  value;  but 
when  compared  with  the  amount  expended  for  the  same  purpose 
two,  three  and  four  months  ago  (if  these  expenses  are  analyzed  and 
compared  with  production  or  sales  or  whatever  factor  would  affect 
the  amount)  the  figures  assume  an  important  significance.  But  if 
expenditures  are  erroneously  applied,  if  an  amount  has  crept  into  an 
expense  account  that  does  not  belong  there,  the  comparison  had  better 
not  have  been  made.  Thus  is  seen  the  necessity  of  an  absolutely 
accurate  distribution. 

Here  the  chart — the  working  plan — is  again  applied  to  excellent 
advantage.  The  chart,  Fig.  7,  applied  to  salary  and  wage  distri- 
bution, shows  to  which  of  the  two  principal  divisions  each  item 
should  be  charged.  This  is  the  important  question — to  properly 
apply  expenses  to  the  commercial  and  manufacturing  branches. 
Subdivisions  of  such  a  chart  segregating  expenses  of  each  division 
are  easilv  made. 


30  ORGANIZATION 

The  application  of  the  items  from  which  lines  lead  only  to  the 
commercial  or  manufacturing  branch  is  readily  understood.  Between 
the  two  are  several  items  from  which  lines  lead  to  both  branches, 
indicating  that  the  expense  is  to  be  divided.  This  division  should 
be  given  close  study.  Care  must  be  used  that  too  large  a  part  of  any 
item  is  not  applied  to  either  branch.  The  salary  of  the  general 
manager,  and  usually  the  comptroller,  will  be  equally  divided.  The 
duties  of  the  chief  accountant,  chief  stenographer  and  stenographers 
being  chiefly  in  connection  with  the  commercial  branch,  only  a  small 
portion  of  their  salaries  is  charged  to  manufacturing.  Shipping 
clerk  and  packers'  salaries  are  charged  to  either  one  or  the  other 
branch,  depending  upon  the  nature  of  the  enterprise.  In  a  manu- 
facturing enterprise  where  all  goods  are  delivered  to  stock  rooms 
ready  for  shipment,  packing  and  shipping  is  a  sales  expense  and  is 
charged  to  the  commercial  branch;  in  a  plant  building  heavy  ma- 
chinery that  must  be  shipped  from  thfe  assembling  floor,  this  expense 
is  usually  charged  to  manufacturing. 

EXPENSE  DISTRIBUTION  CHART 

23.  To  present  a  graphic  record  of  expense  distribution,  the 
chart,  Fig.  8,  is  used.  This  chart  separates  commercial  and  manu- 
facturing expense,  showing  amounts,  while  Fig.  7  shows  to  which 
branch  each  item  belongs. 

This  chart  subdivides  commercial  expense  into  executive,  ac- 
counting, office,  sales,  and  credits  and  collections,  showing  totals  for 
each  and  for  the  entire  commercial  branch.  Manufacturing  expense  is 
subdivided  into  executive,  accounting,  purchasing,  engineering,  and 
shops  and  equipment. 

A  comparison  of  these  statements  from  month  to  month  will 
show  just  what  every  item  is  and  indicate  the  slightest  increase  in 
any  class  of  expense.  Similar  charts  can  be  readily  prepared  for 
any  business,  segregating  expenditures  of  each  branch,  division,  or 
department. 

The  distribution  will  naturally  vary  in  different  businesses  and, 
before  this  chart  can  be  prepared,  the  exact  distribution  must  be  de- 
termined. In  this  chart,  packing  and  shipping  is  included  as  a  com- 
mercial expense,  while,  as  stated  previously.  In  some  businesses  it 
would  be  a  manufacturing  expense.  All  such  questions  must  be 
decided  before  the  chart  is  prepared. 


ORGAXIZATTOX 


31 


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<P 

Er 

MS 

SE 

DISTRIBUTION 

CHART 

^— ---^              g,^PT.^AN| 

CLERKS 

STENO- 
GRAPHERS 

EXPENSE 

TOTAL 

EXECUTIVE 

Generiil.   Mgr. 

Comptroller                     | 

Totiwl                 1 

ACCOUNTING 

Chief   Accountant 

C&.shier 

Billing 

Toti^l 

OFFICE   EXPENSE 

Chief  Stenogr^her 

Mailing 

Filing 

Tott^l 

SALES  EXPENSE 

Advertising  Mgr. 

Copy 

Engraving 

Printing 

Adverttaing  Sp&ca 

Stales  Mgr. 

SMesmon    Ro&d 

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- 

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Traveling    Expense 

Po9ti»ge 

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Packing  ft  Shipping 

Toti^l 

CREDITS  *  COLLECTIONS 

Credit  Mi^n 

Reports 

Records 

Collections 

Toti^l 

TOTAL 
COMMERCIAL  EXPENSE 

f^O?n*^ro( 

Fig.  8.    This  Chart  ol  Expense  Distribution  Shows  the  Amount  oX  Executive  and  Ad- 


EXPENSE  DIS 

►TRIl 

3UTIC 

>N    ( 

:haf 

\T~  CONTINUED 

Mar,ufactur,ny           Wv'^H^S 

CLERKS 

STENO- 
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TOTAL 

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EXECUXIVE 

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Tota.1 

FACTORY    ACC'tnG 

Time  *  Pziy  Roll 

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1 

Cost  Stiktistlca 

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TOTAL     MANUFAC- 
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_      . 

■ 

^ 

ministrative  Salaries,  and  Expense  of  Every  Class,  and  Their  Correct  Apportionment 


34  ORGANIZATION 

EFFECT  OF  PHYSICAL  ARRANGEMENT 

24.  However  efficient  the  personal  organization,  satisfactory 
results  can  be  obtained  only  under  proper  environment.  It  is  not 
merely  a  question  of  pleasant  surroundings  for  employes,  but  a  finan- 
cial proposition;  not  a  reform  or  a  fad,  but  a  money-making  plan 
that  governs  the  engineer  in  laying  out  a  plant. 

This  is  not  to  be  a  discussion  of  welfare  work,  about-which  much 
has  been  published.  Our  purpose  is  to  point  out  the  business  economy 
of  a  proper  physical  arrangement  of  office,  store  or  factory  as  against 
the  wasteful  methods  of  a  systemless  grouping  of  men  and  machinery. 

The  question  of  physical  environment  is  a  practical  one  that  has 
been  solved  by  many  enterprising  concerns,  and  the  subject  is  de- 
serving of  careful  study  by  the  student  of  business  organization. 
While  some  hard-headed  business  men  may  regard  the  question  of 
minor  importance,  it  is  significant  that  the  largest  and  most  successful 
enterprises,  financially,  are  those  in  which  employes  have  been  sup- 
plied with  the  most  comforts,  surrounded  with  approved  safeguards, 
and  aided  in  their  work  by  the  latest  appliances  of  proved  worth. 

There  is  an  old  axiom  to  the  effect  that  even  a  good  workman 
cannot  be  expected  to  do  good  work  with  poor  tools.  It  is  equally 
true  th^t  he  cannot  be  expected  to  do  good  work  in  either  unsanitary 
or  inconveniently  arranged  shops  and  offices. 

25.  Factory  Plans.  The  planning  of  a  manufacturing  plant  is 
a  question  for  the  engineer,  rather  than  the  accountant  or  business 
organizer,  but  a  few  general  remarks  on  the  subject  will  not  be  out  of 
place  in  this  paper. 

It  may  be  stated  as  a  fundamental  principle  (hat  the  factory 
should  be  planned  to  facilitate  the  movement  of  raw  material  from  one 
department  to  another.  In  the  ideal  factory,  storage  for  raw  material 
will  be  provided  where  it  can  be  economically  received  and  easily 
procured  when  needed  in  the  factory.  It  should,  if  possible,  be 
close  to  the  department  in  which  the  material  is  subjected  to  the  first 
operation. 

The  shops  themselves  should  be  arranged  to  facilitate  the  move- 
ment of  partly  completed  parts  from  one  department  or  shop  to 
another.  To  illustrate,  a  foundry  should  be  so  located  that  castings 
can  be  taken  direct  to  the  machine  shop,  or  smith  shop,  not  through 
another  shop  or  in  a  round-about  way. 


OR<JAXIZATION  35 

Likewise,  the  machine  shop,  if  the  process  be  continuous,  should 
be  located  next  to  the  assembling  department.  Or,  if  a  "parts"  store- 
room is  maintained,  it  should  be  located  between  the  machine  shop 
and  assembling  department.  Storage  for  completed  goods  should 
be  adjacent  to  the  assembling  department,  and  convenient  to  the 
shipping  room  or  platform. 

The  chart,  Fig.  9,  shows  a  tj'pical  layout  of  a  manufacturing 
plant  operating  both  a  foundry  and  wood  shop.  Naturally  the 
foundry  and  wood  shop  are  as  widely  separated  as  possible.  Storage 
of  foundry  materials  is  provided  for  just  outside  of  the  foundry,  while 
lumber  is  convenient  to  the  wood  shop. 

The  arrows  indicate  the  movement  of  raw  materials  through  the 
shops  to  the  finished  goods  store-room,  and  from  thence  to  the  shipping 
platform.  If  these  lines  are  traced  it  will  be  seen  that  at  no  point  is 
the  material  twice  moved  over  the  same  ground.  Each  move  takes 
it  to  the  next  operation  and  one  step  nearer  completion.  Where 
materials  and  parts  enter  a  shop  at  two  or  more  points,  the  lines  are 
merged,  showing  that  these  materials  leave  that  shop  as  one  piece, 
part,  or  finished  article.  A  feature  underlying  the  whole  plan  is 
economy  in  the  movement  of -work  in  process.  All  work  moves 
through  a  shop,  not  back  and  forth  in  the  shop. 

The  ideal  conditions  do  not  always  exist,  neither  can  they  be 
brought  about  in  every  case.  Many  plants,  built  in  the  past,  have 
been  planned  without  due  regard  for  these  matters;  their  importance 
was  not  appreciated  and  the  buildings  are  so  located  that  it  is  impos- 
sible to  secure  entirely  satisfactory  results.  ^  However,  if  present 
conditions  are  studied  carefully,  many  improvements  can  be  brought 
about  at  sliglit  expense.  WTiile,  as  we  have  intimated,  this  is  a  prob- 
lem for  engineers,  a  number  of  cases  might  be  cited  where  the  accoiuit- 
ant,  called  in  to  systematize  the  accounting  methods  of  a  manufac- 
turing business,  has  suggested  physical  changes  in  the  shops  that  have 
resulted  in   marked   reductions  in   costs. 

26.  Planning  the  Office.  The  average  office  is  arranged  in  a 
very  haphazard  way.  Departments  are  located  with  little  regard  for 
their  departmental  relations;  desks  are  placed  where  they  fit  best 
rather  than  according  to  any  preconceived  plan. 

Logical  arrangement  of  the  office  has  as  great  an  influence  on 
the  economical  conduct  of  the  work  as  does  the  physical  arrangement 


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ORGANIZATION  37 

of  the  shop.  The  most  important  requisite  in  the  layout  of  an  office 
is  good  Ught.  While  ideal  conditions  are  impossible  to  attain  in  some 
buildings  used  for  offices,  much  can  be  accomplished  by  placing  the 
desks  to  take  full  advantage  of  the  light  that  is  available. 

The  writer  once  visited  an  office  in  which  sixty  or  more  people 
were  employed  in  one  big  room.  Most  of  the  light  came  from  the 
rear  and  practically  all  of  the  desks  faced  the  light,  which  is  recognized 
as  most  injurious  to  eyesight.  The  manager  of  the  office  was  asked 
why  the  desks  were  not  placed  in  proper  position,  and  he  replied  that 
they  were  placed  so  that  the  employes  would  sit  with  their  backs  to 
the  entrance,  and  not  have  their  attention  detracted  from  the  work 
by  visitors.  He  considered  this  an  important  move,  but  overlooked 
the  more  vital  fact  that  his  employes  were  not  only  ruining  their  eye- 
sight but  were  actually  doing  less  work  than  would  have  been  done 
under  more  favorable  conditions. 

A  change  was  consented  to.  As  many  of  the  desks  as  possible 
were  so  placed  that  the  worker  would  receive  the  light  from  the  left; 
some  received  it  from  the  right  and  a  few  from  the  back.  Three 
months  later  this  manager  readily  admitted  that  his  employes  were 
turning  out  at  least  one-third  more  work,  and  their  general  health 
was  greatly  improved. 

The  location  of  the  departments  and  the  private  offices  should 
be  carefully  considered.  Departments  in  which  the  work  is  of  a 
nature  requiring  frequent  inter-communication  should  be  located 
as  closely  together  as  possible.  For  instance,  the  sales  department 
should  not  be  placed  between  the  order  and  accounting  departments, 
but  the  order  department  should  be  close  to  the  accounting  depart- 
ment, with  which  it  is  in  constant  communication. 

The  workers  in  a  department  should  be  placed  to  facilitate  the 
movement  of  their  work  from  one  desk  to  another.  Heads  of  depart- 
ments or  chief  clerks  should  be  within  easy  reach  of  all  employes  in 
the  department,  and  accessible  to  the  executive. 

Offices  of  executives  should  be  located  with  reference  to  their 
duties.  The  sales  manager  and  purchasing  agent  should  be  acces- 
sible to  the  public.  The  general  manager  should  be  within  easy 
reach  of  other  officers  but  not  necessarily  accessible    to  the  public. 

The  importance  of  conveniently  arranged  offices  is  receiving 
much  serious  thought,  and  many  of  the  larger  industrial  enterprises 


38  ORGANIZATION 

are  erecting  ideal  administration  buildings.  In  all  specially  planned 
buildings,  the  tendency  is  toward  large  -rooms,  rather  than  smaller 
rooms  separating  the  departments.  A  large  room  insures  better 
light  and  air,  and  space  can  be  utilized  to  much  better  advantage. 

Fig.  10  is  a  sketch  of  the  first  floor  plan  of  the  administration 
building  of  one  of  the  large  industrial  enterprises.  This  is,  in  many 
respects,  an  ideal  arrangement. 

A  noticeable  feature  is  the  location  of  the  filing  department 
in  the  center  of  the  main  room.  Here  it  is  easily  reached  by  all 
departments. 

At  either  side  of  the  filing  department  are  the  sales  and  accounting 
departments.  In  the  sales  department  several  sales  managers'  desks 
will  be  noted,  with  desks  for  their  assistants  across  a  narrow  aisle. 
It  happens  that,  in  this  particular  business,  sales  are  divided  into  de- 
partments corresponding  with  the  classes  of  goods  manufactured, 
with  a  sales  manager  for  each  department. 

The  accounting,  order,  and  credit  departments  are  conveniently 
arranged,  and  the  auditor  is  located  where  he  can  overlook  the  entire 
office.  Executive  offices,  across  the  front  of  the  building,  are  access- 
ible to  the  public  and  those  in  the  general  offices. 

27.  Store  Plans.  The  subject  of  store  plans  is  one  of  utmost 
importance  to  the  merchant.  His  success  is  influenced  to  a  great 
extent  by  the  first  impression  received  by  the  prospective  customer. 
If  that  impression  is  favorable,  if  he  is  greeted  by  an  orderly,  well 
arranged  store,  if  his  comfort  and  convenience  have  been  considered, 
the  customer  will  return  and  give  to  the  store  at  least  a  part  of  his 
patronage. 

The  old-fashioned  general  store,  in  which  all  sorts  of  merchandise 
was  sold,  offered  little  to  commend  in  respect  to  orderly  arrangement. 
As  a  rule,  the  goods  were  jumbled  together  in  a  confused  mass  with  no 
thought  of  segregating  them  in  departments.  Yet  this  country  store, 
found  in  every  hamlet,  was  the  forerunner  of  the  department  store  of 
today. 

The  advent  of  the  department  store  was  a  case  of  adapting  the 
merchandising  methods  of  the  country  village  to  the  needs  of  the  city. 
A  miscellaneous  stock  of  merchandise,  greater  in  size  but  similar  in 
character  to  the  country  store  stock,  was  gathered  in  one  big  store  and 
subdivided   into  departments.      To  compete   with   one-line  stores, 


ORGANIZATION 


39 


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40  ORGANIZATION 

stocks  must  be  equal  in  volume,  which  meant  that  the  department 
store  must  carry  as  large  a  stock  of  clothing  or  of  shoes  as  the  exclusive 
clothing  and  shoe  stores.  The  stocks  must  be  as  complete  and  as 
well  displayed;  each  department  must  be  a  fully  stocked  store,  pre- 
pared to  meet  the  usual  demands  of  a  store  of  that  character. 

The  department  store  of  today  is  a  model  of  systematic  arrange- 
ment. Not  only  are  the  goods  grouped  in  departments,  but  the  de- 
partments are  logically  grouped  and  located  to  suit  the  convenience 
of  the  customers.  If  one  wishes  to  buy  house  furnishings,  hardware, 
or  dishes,  he  will  probably  find  them  in  adjoining  departments. 

But  the  departmental  idea  is  by  no  means  confined  to  the  recog- 
nized department  store;  it  is  a  feature  of  every  well  regulated  store 
dealing  in  exclusive  lines.  Stocks  of  shoes,  hardware,  clothing,  and 
furnishings  are  all  divided  and  the  classes  segregated  by  departments. 

The  departments  themselves  are  subdivided.  Goods  are  classi- 
fied, and  each  class  placed  in  special  compartments.  Goods  most 
frequently  called  for  are  near  at  hand  on  shelves  where  they  can  be 
easily  reached.  Top  shelves,  space  under  counters,  and  other  inac- 
cessible corners  are  reserved  for  goods  called  for  less  frequently. 

THE  COMMITTEE  SYSTEM 

28.  We  have  already  referred  to  the  necessity  of  cooperation  in 
every  successful  organization.  We  do  not  wish  to  be  understood  as 
advancing  this  idea  of  cooperation  for  the  benefit  only  of  executive 
officers  and  heads  of  departments.  It  must  extend  farther  than  this — 
it  must  penetrate  to  every  nook  and  corner  of  the  shop. 

We  must  have  the  cooperation  of  every  workman,  no  matter 
how  obscure  his  position,  and  to  secure  this  cooperation  it  is  neces- 
sary to  instill  in  him  an  interest  in  the  welfare  of  the  business  as  a 
whole.  Treat  him  as  a  mere  cog  in  the  wheel  and  he  will  very  likely 
be  content  to  do  as  little  work  as  possible  and  still  draw  his  pay,  with 
no  thought  of  bettering  conditions  in  his  department.  But  show  him 
that  you  recognize  his  ability — that  you  know  that  he  knows  how  his 
work  should  be  done — and  he  will  readily  lend  his  cooperation. 
The  problem  of  securing  this  cooperation  has  been  given  much 
study,  and  those  who  have  met  with  the  greatest  success  have  done 
so  by  showing  the  workman  that  his  advice  and  suggestions  are 
appreciated. 


ORGANIZATION  41 

No  matter  how  willing  you  may  be  to  receive  them,  the  work- 
man naturally  hesitates  to  make  suggestions  personally.  But  give 
him  an  opportunity  to  discuss  a  point  with  others  of  his  kind  and  it 
is  surprising  how  many  practical  ideas  will  be  brought  out.  Ex- 
perience has  shown  that  this  spirit  of  working  for  the  good  of  the 
business  can  best  be  maintained  through  the  formation  of  standing 
committees.  Such  committees  bring  out  the  best  ideas  of  the  men 
composing  them,  and  invariably  work  for  the  good  of  the  business. 

29.  General  Factory  Committee.  In  the  manufacturing  branch 
of  a  business,  the  first  committee  to  be  formed  is  the  general  factory 
committee.  This  committee  is  usually  composed  of  the  superin- 
tendent, who  acts  as  chairman,  the  chief  engineer  or  designer,  the 
tool  room  foreman,  or  the  special  designer  of  tools,  the  head  of  the 
cost  department,  and  two  or  three  foremen  of  the  most  important 
departments. 

The  work  of  this  and  all  other  committees  must  necessarily  be 
adapted  to  the  requirements  of  the  business,  but,  as*  a  general  prop- 
osition, the  matters  to  come  before  the  committee  may  be  stated  as 
follows : 

1.  Reports  and  discussions  of  the  standardization  of  the  product. 

2.  Reports  of  progress  on  new  designs  or  the  redesigning  of  old  product 
which  has  been  authorized  at  previous  meetings. 

3.  Discussion  of  economies  in  general  operating  methods,  economies 
in  cost  of  production,  and  all  questions  of  a  similar  nature. 

'  4.  A  report  on  routine  work  in  the  factory — whether  stock  or  special 
contracts — condition  of  orders,  and  condition  of  stock  to  fill  future 
orders. 
6.  The  question  of  promotions.  If  all  promotions  in  the  shop  are 
brought  before  this  committee  for  approval,  it  will  do  away  with 
the  charge  of  favoritism  of  foremen  in  advancing  relatives  or  per- 
sonal friends  without  regard  to  their  qualifications.  A  foreman 
who  is  obliged  to  recommend  promotions  to  this  committee,  will  be 
very  careful  that  the  promotion  is  deserved. 

30.  Departmental  Factory  Committees.  Many  factories  manu- 
facture more  than  one  line  of  goods.  In  such  factories  it  is  advisable 
to  have  committees  to  discuss  progress  in  each  specific  line.  Members 
of  the  factory  committee  should  act  as  chairmen  of  these  depart- 
mental committees.  The  committees  will  be  composed  of  the  fore- 
men interested,  the  tool  room  foreman,  and  the  head  of  the  cost 
department. 

The  work  of  the  committee,  so  far  as  relates  to  a  particular 


42  ORGANIZATION 

department,  will  be  very  similar  to  that  of  the  general  factory  com- 
mittee.    The  discussion  will  cover: 

1  Standardization  of  product  and  suggestions  for  new  designs. 

2.  Progress  on  improvements  already  started. 

3.  Economies  in  operating  expense  and  cost  of  production. 

4.  Reports  on  routine  work. 

31.  Job  Bosses.  Carrying  the  committee  plan  a  step  farther, 
it  is  well  to  hold  occasional  meetings  of  the  job  bosses.  The  foreman 
of  each  shop  will  act  as  chairman  and  discuss  matters  pertaining  to 
work  in  his  own  shop  with  the  job  bosses  under  him. 

In  most  factories  it  is  also  advisable  to  hold,  at  least  once  a  month, 
a  general  foremen's  meeting.  This  should  be  a  meeting  of  all  fore- 
men, with  the  superintendent,  for  the  discussion  of  problems  of  a 
general  nature  sind  problems  relating  to  specific  shops. 

32.  Sales  Committee.  In  the  commercial  branch,  perhaps  the 
most  important  committee  is  the  sales  committee.  This  committee 
should  consist  of  the  general  manager,  who  acts  as  chairman,  the 
sales  manager,  advertising  manager,  chief  engineer,  and  superin- 
tendent. At  times  it  may  be  advisable  to  call  in  the  head  of  the  cost 
department  and  the  tool  room  foreman. 

At  the  meetings  of  this  committee  the  following  subjects  will 
come  up  for  discussion : 

1.  General  sales  report,  showing  progress  of  the  business  as  a  whole. 

2.  Territorial  sales  reports,  showing  sales  in  each  territory.  Both  of 
these  reports  should  exhibit  comparisons  between  the  current  and 
preceding  periods. 

3.  Reports  of  sales  classified  according  to  the  nature  of  the  product, 
or  specific  lines  of  goods.  This  is  in  some  respects  the  most  impor- 
tant of  the  reports,  since  it  shows  which  are  the  fast  and  which  the 
slow  moving  lines. 

4.  Suggestions  for  and  a  discussion  of  proposed  improvements  in  the 
present  products. 

5.  Discussion  of  proposed  new  product. 

6.  •  Standardization. 

In  the  discussion  of  the  three  last  named  subjects  the  engineer 
and  superintendent  are  especially  interested,  and  it  is  here  that  the 
presence  of  the  cost  clerk  or  the  tool-room  foreman  will  be  required. 
A  salesman  naturally  assumes  the  attitude  of  considering  his  custo- 
mers' desires  of  the  greatest  importance.  Naturally  he  wants  the 
factory  to  manufacture  the  goods  that  he  can  sell.  But  a  discussion 
of  difficulties  to  be  surmounted,  increased  costs,  and  like  questions 


ORGANIZATION  43 

will  go  far  toward  bringing  him  into  line  and  convincing  him  that  the 
interests  of  the  house  lie  in  his  pushing  standard  goods. 

S3.  Advertising  Committee.  A  committee  which  is  to  a  certain 
extent  a  subdivision  of  the  sales  committee  is  the  advertising  com- 
mittee. The  general  manager  should  act  as  chairman,  and  .will  have 
with  him  on  the  committee  the  comptroller,  advertising  manager,  and 
sales  manager. 

The  work  of  this  committee  will  be  confined  to  a  discussion  of: 

1.  Results  of  past   advertising,   including  periodical,   street  car,   bill- 
board, and  all  other  forms. 

2.  Appropriations  for  current  advertising. 

These  advertising  reports  are  very  important,  for,  after  sufficient 
time  to  establish  an  equitable  cost  basis  has  elapsed,  all  future  adver- 
tising should  be  based  on  the  cost  of  actual  sales,  giving  due  con- 
sideration of  course  to  the  season  of  the  year,  general  tendency  of  the 
times,  and  other  factors  which  might  temporarily  have  a  disturbing 
influence. 

34.  Organization  Committee.  Another  committee  of  impor- 
tance, which,  for  convenience,  we  will  call  the  organization  committee, 
is  one  which  discusses  all  questions  pertaining  to  accounting  and 
record  systems.  This  committee  will  be  headed  by  the  comptroller 
and  will  include  the  sales  manager,  advertising  manager,  credit  man, 
purchasing  agent,  and  superintendent.  Sometimes  it  will  be  ^advis- 
able  to  call  into  the  meetings  the  chief  accountant,  cost  clerk,  stores 
clerk,  and  even  shop  foremen. 

As  indicated  above  the  chief  work  of  this  committee  will  be  a 
discussion  of  systems.  WTiile  the  comptroller  prescribes  all  systems 
of  record,  reports,  statistics,  and  accounts,  he  should  make  no  radical 
changes  without  discussing  the  proposed  change  with  those  whose 
work  will  be  directly  affected. 

Many  systems,  good  in  theory  and  which  with  cooperation 
would  work  out  in  actual  practice,  have  failed  because  they  were 
forced  on  the  business.  A  systematizer  may  install  a  good  system 
and  get  it  into  operation,  but  unless  he  has  secured  the  cooperation 
of  those  upon  whom  its  operation  will  devolve,  he  will  very  likely  find 
that  after  he  leaves  there  is  a  gradual  disintegration  until  conditions 
are  worse  than  before  the  change  was  attempted. 

It  is  seldom  that  a  foreman  or  a  clerk  will  resent  a  change  if  he  is 


44  ORGANIZATION 

made  to  feel  that  he  is,  in  part  at  least,  responsible  for  the  change. 
When  new  systems  are  introduced  in  the  shop,  the  foremen  are  quite 
likely  to  look  upon  them  as  a  means  of  checking  up  their  departments 
— a  sort  of  police  supervision.  The  writer  has  had  considerable 
experience  in  the  introduction  of  systems  into  factories,  and  has 
invariably  found  that  the  cooperation  of  the  shop  foreman  could  be 
secured  by  asking  for  his  advice.  Before  prescribing  a  form  or  a 
system  of  records  for  a  department,  he  has  made  it  a  point  to  discuss 
the  difficulties  with  the  foreman,  always  leading  the  foreman  to  put 
forward  what  seemed  to  him  the  greatest  difficulties,  and  then  when 
these  have  been  apparently  solved,  to  ask  the  foreman  if  he  does  not 
think  such  and  such  a  plan  would  work.  When  dealing  with  particu- 
larly obstinate  foremen  he  has  even  gone  so  far  as  to  suggest  a  plan 
which  is  plainly  impracticable,  for  the  very  purpose  of  leading  the 
foreman  to  suggest  a  practical  solution.  Needless  to  say,  in  such 
cases  the  foreman  gives  the  plan  his  hearty  support,  because  he  has 
been  made  to  feel  that  the  importance  of  his  suggestions  has  been 
recognized. 

Committee  Meetings.  The  frequency  of  meeting  of  the  com- 
mittees herein  suggested  must  be  decided  by  each  manufacturer.  No 
hard-and-fast  rules  can  be  laid  down,  but  generally  these  suggestions 
will  apply: 

General  factory  committee,  weekly. 

Departmental  factory  committees,  once  in  two  weeks. 

Job  bosses  and  general  foremen's  meetings,  monthly. 

Sales  committee,  weekly. 

Advertising  committee,  monthly. 

Organization  committee,  monthly. 

Committee  Secretaries.  At  each  committee  meeting,  a  stenog- 
rapher should  be  present  to  act  as  secretary.  When  no  record  is 
kept,  discussions  are  quite  likely  to  be  rambling  rather  than  confined 
to  a  specific  subject.  Then,  too,  matters  which  were  discussed  at  the 
last  meeting  have  grown  hazy,  and  if  a  man  who  is  responsible  for 
putting  into  operation  a  given  suggestion  has  failed  in  his  duty,  there 
is  always  the  chance  that  no  one  will  think  of  it  at  the  next  meeting 
unless  he  brings  it  up.  If,  however,  an  exact  record  is  kept  of  these 
discussions  and  full  reports  are  delivered  to  every  member  of  the  com- 
mittee before  the  next  meeting,  a  foreman,  or  other  member,  will  be 
very  careful  about  making  statements  or  promises  unless  he  knows 
that  they  can  be  fulfilled. 


ORGANIZATION  45 

Where  possible,  it  is  best  to  have  the  same  stenographer  act  as 
secretary  to  all  committees,  as  he  will  become  familiar  with  their  work 
and  can  handle  it  much  more  expeditiously. 

THE  SUGGESTION  PLAN 

35.  In  many  factories,  and  even  in  mercantile  establishments, 
a  modification  of  the  committee  idea  has  been  successfully  introduced 
in  the  form  of  what  is  known  as  the  suggestion  plan.  This  plan  con- 
sists in  asking  for  suggestions  from  all  workmen,  these  suggestions  to 
pertain  to  manner  of  handling  their  own  work,  improvements  for  the 
benefit  of  the  business  as  a  whole,  safety  appliances,  sanitary  condi- 
tions, and  anything  that  may  be  of  benefit  to  the  business. 

While  between  foremen  and  heads  of  departments  the  com- 
mittee plan  undoubtedly  works  to  the  best  advantage,  we  advocate 
the  suggestion  plan  for  the  rank  and  file  of  workmen.  Even  when 
called  into  a  committee  meeting,  the  workman  sometimes  hesitates 
to  express  his  opinions,  when  if  he  were  permitted  to  give  them  in 
some  other  manner  he  would  make  many  valuable  suggestions.  The 
plan  is  to  place  at  convenient  points  boxes  with  slots  cut  in  the  top 
in  which  the  suggestions  can  be  placed.  Workmen  are  invited  to 
write  out  their  suggestions  and  place  them  in  these  boxes.  They 
may  either  sign  them  or  give  their  clock  numbers.  The  latter  plan 
is  sometimes  advisable,  as  it  does  not  reveal  the  identity  of  the  mei 
making  suggestions.  All  suggestions  are  taken  up  in  committee 
meeting  by  the  committee  directly  interested,  and  a  small  prize  is 
given  for  those  suggestions  that  are  put  into  use.  Even  so  large  a 
department  store  as  Marshall  Field  &  Co.  has  found  it  extremely 
profitable  to  offer  SI. 00  for  each  suggestion  offered  by  an  employe  that 
is  finally  adopted. 

Another  method  is  to  use  autographic  registers  like  the  one  illus- 
trated in  Fig.,  1 1  on  which  three  copies  are  made.  The  original  is  sent  to 
the  office,  the  duplicate  is  retained  by  the  workman,  while  the  triplicate 
remains  on  a  roll  in  the  machine.  This  is  removed  at  the  time  of  the 
committee  meeting,  and  any  suggestions  adopted  are  posted  on  a 
bulletin  board.  The  workman  fieed  not  even  sign  his  number,  but 
can  present  the  duplicate  as  proof  that  the  suggestion  was  made  by 
him. 

The  introduction  of  any  or  all  of  these  committee  and  suggestion 


46 


ORGANIZATION 


plans  requires  careful  study,  but  when  once  put  into  operation  they 
will  prove  both  successful  and  of  inestimable  value  to  the  business. 

ORAL  ORDERS  CAUSE  CONFUSION 

36.     Probably  no  more  prolific  source  of  confusion  and  mis- 
understanding of   in- 


structions is  to  be 
found  than  in  the 
habit  of  giving  oral 
orders.  "I  understood 
you  to  say"  or  "I 
thought  you  meant" 
are  familiar  excuses 
offered  for  a  failure  to 
follow  what    the   one 


Fig.  11.  Autographic  Register  Made  by  United  Auto- 
graphic Register  Co. 


giving  them  considered  clear  and  explicit  instructions. 

The  absolute  necessity  of  clearly  defined  authorities  that  every 
man  connected  with  an  organization  may  know  from  whom  he  is 
to  receive  orders,  is  well  recognized.  When  we  get  above  the  one- 
man  business,  employes  are  not  left  in  doubt  as  to  the  source  of 
their  orders.  Why  then  should  there  be  left  the  slightest  chance  of 
misunderstanding  as  to  the  nature  of  their  orders? 

When  we  issue  orders  that  are  to  be  executed  by  someone  outside 
of  our  own  organization,  we  are  careful  that  they  are  in  writing.  If 
an  order  for  goods  is  placed  by  telephone  or  telegraph  it  is  confirmed 
in  writing,  not  alone  for  the  legal  protection  afforded  by  a  valid  con- 
tract, but  that  there  may  be  no  confusion  or  misunderstanding. 
When  we  receive  an  order  we  prefer  to  have  it  in  writing  for  the  same 
reasons. 

The  success  of  any  undertaking  is  largely  dependent  on  the 
proper  execution  of  orders.  Surely,  orders  to  be  executed  within  the 
organization  are  of  equal  importance  to  those  that  will  be  executed 
by  an  outsider,  and  at  least  the  same  care  should  be  exercised  in 
issuing  them.  The  logical  conclusion  then  is  that  they  should  be 
given  in  writing.  True,  oral  instructions  are  sometimes  necessary, 
but  all  orders  and  instructions  of  importance  should  be  in  writing. 

There  are  many  classes  of  internal  orders,  depending  on  the  nature 
of  the  business.     Among  them  is  a  class  of  inter-departmental  com- 


ORGANIZATION  47 

tnunications  more  in  the  nature  of  correspondence  than  direct  orders. 
In  the  harmonious  operation  of  an  organization,  many  requests  are 
made  between  departments;  general  orders  affecting  all  departments 
are  given  by  the  manager;  bulletins  are  issued  by  a  department 
manager  to  all  employes  under  him — all  of  these  should  be  in  writing. 
As  an  illustration,  take  a  special  order  from  a  customer.  A  sales- 
man reports  that  an  order  can  be  secured  for  certain  goods  provided 
some  slight  change  is  made  in  the  design.  The  sales  manager  will 
communicate  with  the  superintendent  about  the  cost  of  making  the 
changes.     The  question  then  goes  to  the  general  manager  for  a  final 


TO DE  PART  M  ENT 


SIGNED 


OCPT.  MtAO 


Fig.  12.    Blank  Used  for  Interdepartmeni  Corresi)oiiilenoe 

decision.  Imagine  the  chances  for  argument  if  these  negotiations 
are  carried  on  orally,  but  if  in  writing,  what  each  man  said  is  on 
record  and  entirely  clear. 

No  elaborate  form  is  needed  for  these  communications,  but  it 
is  best  to  use  a  form  differing  from  that  used  in  the  regular  corre- 
spondence. A  simple  form  is  shown  in  Fig.  12.  The  form  should 
always  show  from  what  department  it  comes,  and,  to  avoid  confusion, 
it  is  an  excellent  plan  to  use  a  distinctive  color  for  each  department. 

Each  department  should  keep  a  file  of  these  house  communica- 
tions, including  carlwn  copies  of  those  issued  by  them.     It  is  fre- 


48  ORGANIZATION 

quently  necessary  to  follow  up  their  requests  to  secure  reasonably 
prompt  action. 

To  insure  the  follow-up,  each  department  should  be  provided 
with  a  follow-up  file  or  tickler,  a  file  having  thirty-one  numbered 
compartments  to  represent  the  days  of  the  month.  This  same  file 
can  be  used  for  all  sorts  of  memoranda  of  matters  requiring  attention 
on  a  future  date. ' 

ADVANTAGES  OF  UNIFORM  BLANKS 

37.  One  of  the  little  points  in  the  routine  workings  of  a  business 
office  that  is  not  always  given  proper  consideration  is  the  establish- 
ment of  a  uniform  system  of  blanks.  The  blanks  used  for  a  given 
purpose  in  one  department  will  be  of  a  certain  size  and  color,  while 
those  used  for  the  same  purpose  in  another  department  will  be  radi- 
cally different  in  both  size  and  color.  Or  blanks  of  entirely  different 
classes  will  be  identical  in  size  and  color.  The  result  is  a  miscel- 
laneous collection  of  blanks  in  all  sorts  of  shapes  and  sizes. 

Uniformity  in  blanks  at  once  establishes  a  means  of  identifica- 
tion, avoids  confusion,  saves  filing  space  and  limits  mistakes. 

Though  we  may  have  given  the  subject  little  thought,  we  have 
long  been  accustomed  to  uniformity  in  certain  blanks  and  business 
papers.  If  we  have  been  receiving  freight  over  several  railroads  the 
freight  bills  of  each  have  been  readily  distinguished  by  size,  color  and 
style  of  printing.  Correspondence  from  our  customers  is  recognized 
by  the  style  of  the  stationery,  and  orders  are  distinguished  from  other 
communications  of  the  same  concern. 

Aside  from  the  question  of  convenience,  there  is  a  certain  adver- 
tising value  in  stationery  and  blanks  with  distinctive  features.  At  a 
glance  we  recognize  in  the  morning  mail  the  communications  from 
certain  of  our  correspondents.  We  feel  sure  this  envelope  contains 
a  remittance,  that  one  a  welcome  order,  another  an  invoice  of  goods 
for  which  we  have  been  waiting;  each  is  recognized  by  a  certain  style 
of  the  envelope.  At  no  additional  expense  we  can  make  our  own 
stationery  distinctive.  Letter  heads,  order  blanks,  statements,  in- 
voices, remittance  blanks  will  be  recognized  not  by  one  but  by  all  of 
our  regular  correspondents.  They  will  soon  learn  to  associate  our 
name  with  certain  styles  of  stationery. 

Distinctive    stationery    does    not    necessarily    mean    expensive 


ORGANIZATION  49 

stationery.  Our  advice  is,  buy  the  best  quality  that  you  feel  you  can 
afford;  above  all,  make  it  distinctive,  make  it  represent  you.  Adopt 
a  color,  or  style  of  type,  or  shade  of  ink  that  will  make  your  stationery 
stand  out  from  the  mass  coming  to  the  desk  of  every  business  man. 
The  problem  of  filing  space  is  a  serious  one  in  most  offices, 
already  overcrowded  Filing  devices  are  made  in  certain  sizes  that 
have  become  standard.  The  more  closely  blanks  to  be  filed  conform 
to  these  sizes,  the  less  space  will  be  required.  AYhile  we  cannot 
regulate  the  sizes  of  the  stationery  of  our  correspondents,  we  can 
regulate  the  size  of  our  blanks  that  will  eventually,  find  their  way 
into  our  own  files. 


EXAMINATION  PAPER 


ADMINISTRATIVE  AND 
INDUSTRIAL  ORGANIZATION 


Read  Carefully:  Place  your  name  and  full  address  at  the  head  of  the 
paper.  Any  cheap,  light  paper  like  the  sample  previously  sent  you  may  be 
used.  Do  not  crowd  your  work,  but  arrange  it  neatly  and  legibly.  Do  not 
copy  the  answers  from  the  Instruction  Paper;  use  your  own  words,  so  that  we 
may  be  sure  that  you  understand  tlie  subject. 


1.  If  called  on  to  perfect  the  organization  of  a  business  enter- 
prise, what  would  be  your  first  steps  in  making  your  investigation? 

2.  In  creating  responsibilities,  how  would  you  regard  the 
individuals  conducting  the  enterprise? 

3.  Explain,  in  your  own  terms,  the  objects  of  organization. 
WTiat  are  the  principal  components  of  a  business  organization? 

4.  What  is  the  function  of  the  executive  committee?  Over 
what  divisions  does  the  general  manager  have  authority,  and  to  whom 
is  he  responsible? 

5.  Into  what  sections  do  the  commercial  and  manufacturing 
divisions    divide? 

6.  Make  a  chart  of  an  industrial  organization,  showing  the 
principal  components  and  their  relationship,  one  to  the  other. 

7.  Who  are  the  immediate  assistants  of  the  general  manager? 
Explain  the  nature  and  responsibilities  of  their  positions. 

8.  Make  and  explain  a  chart  showing  the  sub-divisions  of  the 
commercial  and  manufacturing  divisions  over  which  the  two  assistants 
of  the  general  manage!"  have  authority. 

0.  Explain  how  these  principles  of  organization  are  applied 
to  the  small  corporation. 

10.  In  a  corporation  organized  to  conduct  a  trading  business, 
how  does  the  organization  differ  from  that  of  a  manufacturing  enter- 
prise? 

11.  What  are  the  specific  duties  of  the  comptroller?  Over 
what  departments  does  he  have  absolute  authority,  and  who  are  his 
immediate  assistants,  in  charge  of  those  departments? 


ORGANIZATION 

12.  What  are  the  functions  of  the  sales  division?  Who  are  the 
department  heads  in  control  of  the  sales  division,  and  what  are  their 
specific  duties? 

13.  To  what  departments  does  the  authority  of  the  superin- 
tendent extend  ? 

14.  Who  are  the  immediate  assistants  of  the  superintendent, 
and  what  are  their  duties? 

15.  Describe,  liriefly,  the  duties  of  the  purchasing  agent. 

16.  What  general  rules  should  be  made  in  respect  to  a  definition 
of  duties  and  authorities? 

17.  Illustrate  by  means  of  a  chart,  with  necessary  explanations, 
the  proper  distribution  of  salaries  and  wages  in  a  manufacturing 
enterprise. 

18.  Prepare  an  expense  distribution  chart,  showing  amounts  for 
a  business  selected  by  yourself. 

1 9.  Illustrate  the  location  of  the  departments  in  a  manufacturing 
enterprise  with  which  you  are  familiar,  and  suggest  how  the  plan 
might  be  improved. 

20.  What  general  plan  should  be  followed  in  arranging  an 
office.  Illustrate  a  model  office  plan  for  a  business  of  your  own 
selection. 

21.  What  is  meant  by  the  commiUee  system? 

22.  Name  the  usual  committees  which  consider  questions 
afl'ecting  die  operation  of  the  manufacturing  division.  How  are 
these  committees  made  up,  and  wluit  (piestious  do  each  consider? 

2.3.  What  committees  consider  (questions  aft'ecting  the  com- 
mercial division?  What  cjuestions  are  considered  by  these  com- 
mittees? 

24.  Explain  the  suggestion  plan  and  its  operation. 

25.  Suppose  the  sales  manager  wishes  to  send  out  a  sample 
which  must  be  made  in  the  factory.  How  should  he  proceed  to  secure 
the  sample? 

After  completing  the  work,  add  and  sign  tlie  following  statement: 

I  horoliy  certify  that  the  above  work  is  entirely  my  own. 
(Signed) 


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